Monday, March 16, 2009

Home Affordable Refinance and Modification -Not!

I think that home ownership is a good thing. I think that helping people avoid foreclosure is a good thing. I realize that sometimes life throws you curveballs, and we all should be prepared to help people out.

However, after spending several days going through the provisions of the Home Affordable Refinance and Modification Plans, I am concerned about several provisions. I am not supportive of using my tax dollars to lower interest rates to 2%. I am not in favor of forgiving debt for mortgages that are underwater.

I would have thought a better situation would be to lower rates to market, and then to extend the length of the loan to lower the payments to reach the 31% threshold that the plan seems to consider bearable. While in some cases this might produce very long term mortgages, I think its a more equitable solution in the long run. It allows people who are having trouble stay in there homes and allows people who can't refinance at lower rates because they are underwater to refinance. It does not reward people who assumed excessive amounts of debt by letting them out of their obligations.

1 comment:

  1. To make a plan of action, never pay somebody a lot of money to help you avoid foreclosure and educating yourself is the most important step to take when facing foreclosure.
    In that way, your credit rating is maintain and your home is still in your hands.