As he announced his $75 Billion bail out plan for homeowners, President Obama informed America that the "plan will not save every home" - in effect not everyone will qualify for loan modification - not every home will escape the foreclosure block. The Plan, as it appears to be set up, does not require the participation of anyone - not the Lender, not the Homeowner.
The $75 Billion Home Stability Initiative, instead, provides a vehicle of incentives, on the one part, for Lenders to cut monthly payments to an estimated 4 million homeowners on the verge of foreclosure. The other part is set to assist homeowners whose homes have lost value - their mortgages should be owned or guaranteed by Fannie Mae or Freddie Mac. In this latter scenario, it is seen that some 5 million homeowners could benefit as the Plan would allow for the absortion of some $200 million in losses by each of the two companies using funds set aside by Congress in 2008.
Economy.com tells us that 13.8 million or almost 27% of 52 million homeowners with mortgages owe more (on their mortgages) than their homes are worth..." It is expected that homeowners, whose loans exceed their properties' value by more than 5%, may experience difficulties getting the help they are seeking from their Lender.
Investors holding certain toxic mortgage-backed securities, who make monies from interest payments, may not be too willing to cooperate, and this could be key to preventing many foreclosures. Could this be something the President was thinking about?
So if I have a mortgage held by Wachovia...there is no help if I want to reduce my monthly payment...there is no guarantee the banks will help
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