Ryan’s Mortgage Blog:
Congress is set to vote today on a $15 billion housing aid plan for foreclosed properties and homeowner rescue. It is one of the biggest actions Congress has taken to address the housing crisis. Under the plan, troubled homeowners could refinance into government-backed mortgages and states would get money to deal with foreclosed property. I also read that part of this plan would reduce the principle owed on these government back loans to no more than 15% off of the homes’ appraised value. According to the AP, the plan is also to include a housing tax credit of up to $7,500 for first-time home-buyers, to be paid back over 15 years. It would permanently raise the limit on the size of loans FHA could insure and Fannie Mae and Freddie Mac could buy to $729,750 in the highest-cost housing markets. The limits are set to go back down at the end of the year after they were temporarily raised recently.
President Bush has already claimed he would veto the plan and many republicans are against it. From what I read congress is pretty split about the issue as well as the American public. Republican critics argue it rewards lenders and investors who own the property, and could act as an incentive for them to foreclose rather than find ways to help struggling borrowers stay in their homes.
I am on the fence as well as to what the answer is. Something obviously needs to be done about the housing problem because it is directly related to the economy. We need to get a step ahead and not wait for more problems to arise. I definitely don’t want the big banks to be “rewarded” here. I also don’t want to make it easy for people to “walk away” from the homes. Walking away should be a very last resort for any homeowner. I understand some banks are making it hard not to walk away…maybe the government should send out a bunch of fair minded mediators to make deals between troubled homeowners and the lenders…and maybe there will be world peace too. You can contact me with any questions or just to rant and rave at RBaker@PeregrineLending.com or 805-540-0866.