The Obama Mortgage Relief Program - In short;
The real problem with foreclosure lies in loans that Fannie and Freddie do not have a lot to do with - the nonconforming market, sub-prime loans, a lot of alternative-A loans, some jumbo loans - and that's where most of the foreclosures are occurring and will occur. And they don't benefit from that part of 'the plan'.
"President OBAMA: Here is what this means. If lenders and homebuyers work together, and the lender agrees to offer rates that the borrower can afford, then we'll make up part of the gap between what the old payments were and what the new payments will be."
And in addition, the government would provide incentives to mortgage servicer's, including a thousand dollars for every modified loan. The program would be voluntary, although any financial institution should take rescue money from the government in the future would be required to participate.
The president estimated 3 to 4 million homeowners would be aided by this part of the plan. This element of the package depends too much on interest-rate reductions. He argues that given just how far home values have fallen, reducing principal on loans is necessary to halt foreclosures quickly.
Of that ever increasing number, to date only approximately 500,000 homes have qualified within the programs guidelines.
Usually, and as observed above, disqualification can come when, by the guidelines, when a persons assets are viewed, if they hold too much it is viewed as a sign that they could afford the payments and they are denied accordingly.
And if you want to start drawing arrows in the proverbial sand as to who to blame, you might want to look deep into who's actual hands were out when these programs were sold by the Investor's who made these programs with their loose guidelines, Loan Officers who sold them, to whomever would buy the house; whether a pulse was obtained or not! That's right, mortgages were being sold with deceased persons on title! (because, no one cared! it was worthy of being sold on open markets to gain widely except profit!)
Continuing, the paper (mortgage notes) would go onto Banks that would then sell/trade the paper, sometimes in bulk, then hedge fund managers fueled by other investors would trade onto exponential markets that bet against outrageous odds sending profits into the trillions.
So where does the fall? Who exactly DO we place blame onto? Whether you sit in a well paid off mortgage or home that has no mortgage, we are are somewhat guilty of excess and our society, judging from our homes to our toys ,,, to our morbidly obese bodies and onto our failing health. We were all told that it was "okay" to tap into our ever falsely increasing equities as if it were an ATM. SPEND, SPEND, SPEND was the mantra!
Those that actually can sit back with their armchair mentality and wag their fingers, saying, 'See, I told you so!" are of the extreme few and far between. We all wanted the best for ourselves and just went with what was being offered thinking it WAS a good thing. No one had a crystal ball, if we could have seen this coming, no sane person would have entered into it. No one!
