Arizona Mortgage Guru » Details of the $300,000,000,000.00 Mortgage Overhaul

Okay most everyone knows what I think about this massive bailout package Congress is about to pass. In case you missed it, I think it’s a sham. Seriously. A big sham. How else do you explain this to the 30% of tax payers who are not homeowners. How about the 80%+ homeowners who pay their bills on time, buy what they can afford and read before they sign? Yeah. How about these tax payers. Mr. and Mrs. Renter who lives within your means how about you pony up some dough so that we can clean up the mess our Wall Street pals and a few over excited folks made over there.

Okay.

Take a deep breath.

Aaaaaaaaahhhhhhhhhhh!

Now. Here are some of the details of the $300,000,000,000.00 mortgage rescue plan currently being “debated” in the Senate. From the Dallas Morning News:

They would receive a refundable tax credit of up to $8,000, or 10 percent of the home value, on purchases of unoccupied housing.

As part of a regulatory overhaul of Fannie Mae and Freddie Mac, the mortgage finance giants, the bill would permanently increase to $625,000, from $417,000, the limit on loans they can purchase from lenders in expensive housing markets. That would make it easier for borrowers in those areas to obtain mortgages at discounted rates.

Later on in the same peice it says:

The Senate bill would provide $150 million to expand counseling for borrowers to prevent foreclosure and establish stricter lender disclosure rules to make plain the maximum monthly payment for an adjustable rate loan.

The bill also establishes an Affordable Housing Trust Fund, to be financed by $500 million to $900 million in fees from Fannie Mae and Freddie Mac. Initially, the trust fund would cover any expenses related to the foreclosure rescue plan, meeting a demand by Senate Republicans that taxpayers not pay for the program.

Under the refinancing plan, only borrowers seeking to remain in their primary home would be eligible, shutting out real estate speculators and owners of vacation homes. And lenders would first have to agree to cut the principal balance of loans to roughly 85 percent of each property’s current value, a substantial loss in many housing markets.

Arizona Mortgage Team has a great post with all the details too.

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Tags: bill, Congress, housing rescue, Mortgages
Categories: Congress and Government, Debt, Economics, FHA

3 Responses to “Details of the $300,000,000,000.00 Mortgage Overhaul”

Christoph Schweiger wrote a comment on June 26, 2008, 8:21, am

What ever happened to Capitalism? Something is very wrong if the consequence of risk is removed. If you speculate there is a chance to loose… If you gamble there is a good chance that you loose… No need to go on…Oh and what more can be more stricter about lender disclosure? I just signed an insurance policy where I had to initial that I refused the agent reading the entire policy to me. (I read the policy before I signed) This fact just proofs the point that you cannot force an individual to be prudent. Yes I am all for protecting consumers from abuse but where does it stop?

It sure looks like that the majority of consumers choose to be victims and demand entitlement. A bailout sure will be the “easy way out” from the “easy way in” into this mess. Commons sense dictates that there should not have been the “easy way in” provided by sub-prime lenders in the first place.

Now Pandora’s Box is opened and “We, the People” have to deal with it. We all are now on the same boat called “US Economy” with big holes in the hull. Unfortunately we all have to work to prevent the boat from sinking, but in my opinion the people who caused the damage should not be let off the hook so easily. Let’s together plug the holes first to keep this boat afloat. If it stays afloat we should charge the passengers who caused these holes a little extra for the privilege to be a passenger.

I am not sure how we all can solve the current situation to be fair and reasonable to everybody. The one thing however I am very sure about is that the days of common sense and prudence have got to return.

Gary Miljour wrote a comment on June 26, 2008, 9:16, am

I just love how the government fixes a problem by creating another problem.

With all the issues going on in the USA they decide to spend their time on this?

What a waste.

Shailesh Ghimire wrote a comment on June 27, 2008, 9:25, pm

Christoph,

The whole concept has been diluted. Risk is to be taken with the foreknowledge that the government will always back you up. I think that is the way Wall Street operates. They know that is something should seriously head south, then Uncle Sam will bail them out. It’s happening more and more. As long as you’re big enough though, otherwise, they don’t care.

It’ll be interesting to see how the people they’ve been raiding turns out. Whatever the case, the precedent has been set and that is what worries me the most. Especially with the possibility of a potential liberal administration. Thanks for your comment.