Making Home Affordable Program Explained

I completely agree with Todd on this one. Our country and government has this sense of being completely entitled to home ownership. Our country is a free marketplace. Like it or not, that is what it was founded as. It isn’t a fair system, and wasn’t designed to be. If you can’t buy a house without government propping you up or subsidizing it, you shouldn’t be buying a house.

Barack is just having other people pay part of your payments by subsidizing your interest rate. How can people be OK with this? Can I start taking 10% of your (aimed at no one in particular here) paycheck to subsidize my cable TV bill because I can’t afford it? Don’t we all deserve cable TV?

Hey folks… I tend to agree with the sentiments of everyone here… but I have this question for you:

Would you take advantage of the program if you qualified? For us, the answer is a definitive yes… Even though I disagree with the fundamentals of a program like this, I think it is only wise to take advantage of every opportunity presented to save money / create a more secure future.

Todd, Easy to say this – but the reality is that the low rates in the mortgage market today are almost wholly due to to the central bank’s decision to buy up 700 billion on mortgage debt – a very politically motivated decision that has essentially the same effect (it spurs inflation, which eats money from all of us). From reading your blog, you and we both refinanced lately… so in some sense, we’re already taking advantage….

You know, my husband and I scraped together money WHILE going through college for a downpayment on a house. We bought a much smaller and cheaper house than our bank and realtor tried to convince us to buy (but what we thought we could afford). We darn socks. We don’t eat out. We drive cars paid for in cash that are 10 years old. We do all the work on our house ourselves. Our property value has gone down so much that we can’t afford to sell, even though we put a substantial downpayment down and have been paying off principal. Because of this, we are forced to put off having a family for at least a few more years do to lack of space (due to professional uses for much of the 800 sf house). No babies till we sell the house… and everyone else who maxed out their credit cards, bought a huge house with no money down, and drives hummers gets a bailout from the government.

Where’s mine?

We probably qualify for the refinance… but we’ll just sit tight for now. It will only cost us more money than we have to refinance. Even the calculators say “sit”.

Maybe it’s just me being naive, but I don’t think most of the folks that run up huge credit card debt and knowingly buy overvalued properties with crazy loan schemes are responsible enough to refinance or modify their loans with these programs. First, they probably won’t qualify for them, and second, they are more likely to dump the properties and not think twice about how much damage they’ve done to their credit scores. At least the people like this I’ve heard about are just plain lazy and irresponsible, and they’ll get their reckoning by not being able to get a loan or credit for a very long time.

I’m glad these programs exist, because the reality is that even if you were responsible, other factors that are unforeseeable do creep up – layoffs like we haven’t seen in decades, medical crises, and life changes (new baby, death, divorce, etc.). It’s fine to say that the market will adjust for all the bad money management, but the truth is that we’ll all suffer if it creates a situation where you can’t get a loan for responsible things like to go to school, cover medical expenses, start a business, etc., because foreclosures give banks reason to not loan out money, and you can’t even use your home as collateral because it’s devalued. Yes, the market will readjust, but what if it takes 10 years – could you put off sending your kids to college, covering medical expenses, etc. for that long?

We have good credit but have a high mortgage payment every month (which we cover religiously), we have a second child on the way, we drive a 13 yr old car, my husband’s company keeps pushing him to work crazy hours by saying they may have more layoffs this year (personally, I think they’re just taking advantage of everyone’s fear of being laid off, but that’s another story), and they cut all the employee’s salaries (even though they increased their fees to clients – another part of that other story).

We’re trying to refinance in part to cover my husband’s salary decrease, which would affect how we’d afford the new baby that’s coming soon. But our house appraised much lower than it should have. In our case, it’s because appraisals are based on the past year’s sales. Very few homes our size (more than 2 bedrooms) sold in our community in the past year, because of layoff fears, changes in the jumbo conforming limit rules, etc. So the appraisal was mostly based on one home that sold a mile away that is adjacent to a freeway, which is just ridiculous. All the 2 bedroom places sold maintained their value, so we know our market is much more stable than that. Fortunately, though, with the new government plan, we can still refinance! Finally, some reward for being responsible.

I am a homeowner that bought this house 2 years ago. I had a credit score of 770. I had a great job. now I am out of work and unable to make $2000 monthly house payments on a 1100 sf house. the equity in the house dropped -27%. unable to refinance and unable to sell. unemployment only pays $2000 a month. I used to make $5500 a month. I did not buy a big fancy house out of my means. The previous comments all think this modification is coming out of their pockets…Really!! you really believe that? It comes out of profits. 2% of the modification comes from the Federal gov’t. any other cuts in the program comes out of the banks immediate interest profit. my bank takes $1350 each month in interest. they drop that by $500 they still make (profit) $850 each month. If they do not do this they will have to forclose with a cost of nearly 1 to 2 years of no payments, the house getting vandilized while sitting empty and the initial equity loss of $80,000 so the bank is talking about taking nearly a $200,000 loss on a $270,000 loan and neighbors will lose property value. So what do you think? How about the bank not make as much and let me pay what I can while unemployed. The modification is temporary and you have to pay most of it back when the house gets sold. So you can slam people for asking for help and getting it but it really is a win-win situation. Did anyone say you were going to pay more taxes? Don’t judge with ignorance. Even the “Tax Break” to purchase a home…people don’t realize you pay it back! get the facts before throwing me out on the street and giving you a lot worse situation