Some people are unhappy paying their mortgage when others are being bailed out. From the article:
“Why am I being punished for having bought a house I could afford?” he asked. “I am beginning to think I would have rocks in my head if I keep paying my mortgage.”
And this:
“This is not about trying to create fairness,” said Michael H. Krimminger, special adviser for policy at the Federal Deposit Insurance Corporation, which is working with Treasury on the latest plan. “The goal is to keep people in their houses.”
And this:
“If the government says, ‘Prove that you can’t afford your house and we’ll redo your mortgage,’ then people are going to try to qualify,” Mr. Schiff said.
In that situation, those who will benefit the most are the ones who, unlike Mr. Lawrence, spent far beyond their means — who refinanced their houses and used the cash to buy toys and lavish vacations, or sometimes just to pay the bills.
“You put something down, you have something to lose,” Mr. Schiff said. “You put nothing down, you’ve got nothing to lose.”
And finally, this:
The Federal Housing Administration began Hope for Homeowners on Oct. 1, aimed at making as many as 400,000 mortgages affordable. Under the program, lenders will refinance loans to 90 percent of a house’s current value, automatically giving the owner 10 percent equity.
The loans will be insured by the government, which will take a share of any gain when the house is sold. If a sale occurs in the first year, the government takes it all. The second year, it takes 90 percent; and so on down a sliding scale. After five years, it takes half the gain.
To guard against fraud, an F.H.A. spokesman said, borrowers will have to certify they did not “intentionally” default.
The Hope Now Alliance, an initiative by a range of lenders, trade groups and counseling agencies, says it has aided 2.3 million borrowers in the last year. Nearly half of Hope Now’s most recent workouts involved modifications of the original loan, including reducing the principal or the interest rate.
Sure, go ahead. This is just like the liar’s loans – just ask the borrower to “certify” to something and then take their word for it. Like that’s going to prevent fraud. Why can’t you afford your mortgage payments? Are spending money on eating out? Cigarettes? Pets? Taking a vacation? Buying new clothes? Why shouldn’t you be forced to cut down on these luxuries? Who decide what is a luxury and what isn’t? When you think about it, everything other than food, mortgage payment, transportation to work and heating expenses are a luxury. Cable TV, cell phone, your own car – billions of people in the world live without them.
