Can somebody explain Obama's housing plan to me?

This doesn't do anything for me right? You have to already have a loan with Fannie or Freddie? You have to be upside down by a certain amount? And the rest of us can just go to hell? I really don't get it and it's pissing me off. We've paid BILLIONS to the banking industry and yet I can't get a little relief on my mortgage payment?

We can't get the goverment to insure some low interest rates for a while so that average people can get a break? I understand and fully support the need to take care of people who are in the most trouble but what about those who are potentially on the verge of trouble and have been lucky enough to hang on?

With my luck I'll probably lose my job and go into foreclosure on my mortgage in a couple of years, right as all of these economic stimulus programs are ending.

Now they are being written by your government.

Do not disturb them.

Yeah, it's bullshit. Sounds like the only help for homeowners will be in those markets where the real estate hasn't dropped too much in value.

and the house can only be "just so much" upside-down..Most will not qualify. It's that simple.. the upper limit is waaaaay too high $700-something thousand..and the mortgagor gets "kickback-style" payments in thousand dollar increments, if they maintain & holds the mortgages for x# years..

It's so convoluted, it ought to exclude most people..

If they really wanted to help "most people" they would slap an upper limit of $400K (and only that high in selected cities), adjust the rate to 4% across the board.,.,for 30 years..and then set out to RE-appraise all houses with mortgages to realistic values..and then do a one-time "cram-down"..

Medicine, taken all at once, is far better than a drop at a time..

A $400k limit!? You're essentially saying that nobody who bought in a California city within the past few years should receive any help!

The idea is to MODERATE the cost of houses and to NOT "protect" people who can truly "afford" the Big'guns:)

Which is around $300k. http://www.latimes.com/business/la-fi-homesales20-2009feb20,0,7584906.story

what's considered "middle class".. That's where the BULK of the "pain: is, and what needs tackling FIRST..

Houses are already seeing values drop like rocks, although the people still technically "oqwe" the whole amount.. after a "cramdown", the excess is "written down" like the banks & big boys do all the time, so the homes THEN become more in line with reality..

In a realistic maket, just how many "middle class" working people could come up with a 20% cash downpayment on a $400K+ home..since their investments have tanked too..and their jobs may have been downsized..

The object is to get things moving again, and a NEW "floor" must be established. The people with $100+ laying around to put down on a house, will weather this storm just fine..no matter where they live..

The apparent new norm is no more than 31% of your gross income for a monthly payment..

31% of 250K a year works out to $6,458.33 payments 12 times a year..

You want your tax dollars to subsidize people able to pay $6450.00 a month for a house payment? Is $250k "middle class"? or is $$50-60K a year, struggling to buy a $75K house ?

I think a $400k house in California is easily middle class though. Very few people put 20% down. My wife and I put 10% down, we each had a third of that saved and borrowed the other third from family, so you hardly have to be wealthy to afford the down payment.

I have no idea what you're trying to say with your last 3 paragraphs. Your numbers are way off. $730k on a 30 year fixed at 5% is only $3918 a month, not $6458. At the $400k limit you propose, it would be $2147 a month. That's 30% of about $7150. That's a two income family making $43,000 each. Easily middle class.

Yes, at $730k limit pushes that a bit but we're certainly not talking about millionaires here. More like a couple of upper middle class professionals making $78k each (30% of the $730k monthly payment @5%) Those people are equally at risk of foreclosure if one of them suddenly loses their job.

:)

That's over a million dollar house you're talking about. The limit is $730k. :shrug:

that's where the numbers come from...and the apparent "upper limit" for middle class is $250K..

If the top limit is a $720k mortgage, and they can help you refinance at 5% (although I assume it will be even lower) that's a monthly payment of $3918 (30 yr fixed @ 5%). That means to qualify you would need to make $151k a year, not $250k. ($3918 x 3.22 x 12). Admittedly that's quite a bit of money, but in a two income family at $75k each per year, it's not totally unfeasible. I think that qualifies as middle class in most major cities. Certainly in Los Angeles, San Francisco/Silicon Valley, and New York.

and now I'm confused. I haven't heard anything about an upper limit for incomes. I was talking about the upper limit for mortgage amount.

I also thought you were saying you had to have less than 31%, not more.

Hmm, this changes things a lot.

it's more or less become the accepted upper limit for the "new" middle class..

The information from the senate hearing last week was that people had to be paying MORE than 31% of their GROSS income as a monthly payment, to qualify for the particular plan they were discussing..

The whole plan (actually , it sounds like there may be several in the works) seems to be pretty unworkable for MOST people..
The monthly rate GROSS for $250K is over TWENTY THOUSAND DOLLARS A MONTH.. That's not the group of people I think of, when the words "middle class" are uttered..

That's my only point...

I think of the person making $2500.00 a month, with a car payment and trying to keep a roof over their heads..

i think they HAD to extend the upper limits, in order to get support for the measure, but the people who are the most savvy, and who "have friends, who have friends" will snatch up help, and the ones who only get phone robots and hours on hold, will miss the boat.. as usual..:(

I can't find any reference to $250k in any of the housing stuff.

It looks like there are two groups of people who qualify:

If you're not behind on your mortgage, your monthly payment has to be UNDER 31% of your gross income, your loan has to be with Fannie or Freddie, and your home value has to be about the same as what you owe. This is just for people who can't refinance because they're a little underwater. This is called the "Home Affordable Refinance" plan. There doesn't seem to be any kind of guaranteed rate here, it's just a way to allow some people to refinance that can't under the current system.

If your monthly payment is OVER 31% of your gross income, your loan doesn't need to be with Fannir or Freddie, and you don't have to actually be delinquent, just to prove that you're in imminent danger of defaulting (recently increased mortgage payments, loss of income, etc.) This is called the "Home Affordable Modifications". These people can get rates as low as 2% and some weird complicated 5 year deal.

Call your mortgage holder and ask to speak to someone. I understand the program rules for most of these companies wont roll out till March 7th.

you don't have 20% equity, now they will refinance you up to 105% of your value. That is the part that will help you refinance.

If you had a change of circumstance resulting in problems paying your mortgage, you could be eligible for assistance. But the payments can be lowered due to extention of your 30 year loan to 40 years or a decrease in your interest rate down to 2% minimum. After 5 years, your loan will revert to its original terms. Basically you are getting another teaser rate with a 5 year reset.

That's pretty much what I realized after reading this official pdf http://www.financialstability.gov/docs/borrower_qa.pdf

So I guess there's no hope of low rates for everyone.

I'm not sure if the fears about the upper limits are justified.

For example my wife and I are both self employed and our monthly payment is about 29% of our gross income. Theoretically we could intentionally make less money to get that number up above 31% and qualify for the program. But at best what they would do is:

- Figure out what your new rate should be to get it down to 31%
- See if that's cheaper for the lender than foreclosing
- if so they give you this rate for 5 years (after a 3 month trial period)
- after that your rate can increase 1% a year until it hits a cap (determined by the market rate on the day you sign)

So this doesn't exactly seem like a plan that a lot of wealthy people are going to be exploiting to try and game the system.