The Obama administration unveiled an expansion of its $75 billion foreclosure prevention plan yesterday, providing new subsidies to mortgage lenders and investors.
Under the expanded plan, some homeowners could see their payments fall significantly and the interest rate on their second mortgage pushed down to 1 percent. The announcement comes nearly two months after the administration launched the housing program, called Making Home Affordable. While officials said some borrowers have already received help, the foreclosure rate is rising and it could be months before the program begins to have an impact.
The new efforts address, in part, criticisms from consumer advocates that the administration’s housing plan did not go far enough and that borrowers still face too many barriers to receiving help.
“Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is in turn critical to stabilizing our financial system overall. Every step we take forward is done with that imperative in mind,” Treasury Secretary Timothy F. Geithner said in a statement.
Countrywide (now B of A) won’t foreclose on my property … yet … because they are waiting to see if they can offer me this new plan. I seriously doubt this $1000 per year will help me because I am about $140,000 under water. Sure, many people have lost a lot more value than this in their homes, but in my case I was talked into an adjustable rate mortgage when I asked for a 30 year fixed rate. Next year in 2010 when my rate adjusts, I won’t be able to make the payments.
Knowing that, I stopped paying early and rented an apartment… without moving into it.
In my view, my credit should not even be negatively impacted by any of this because I was duped by a predatory lender. Since this was my first home, I had to trust the loan expert when she told me that there were many ways I could refinance even if my home’s value dropped. That was a lie and, although I was very careful about everything along the way, to the point of being very annoying to everyone in trying to understand every detail… the Countrywide loan expert’s mis-information resulted in what has become the worst financial decision of my life.
Why didn’t I insist on the fixed 30 year loan? “Why would you want to pay more?” she asked. Because I’d have a guarantee that my rates will not go up. The worst part is waiting to be kicked out of my house and not knowing exactly what the tax consequences will be. Will I owe $30,000 in debt forgiveness to the Federal Govt. because I have too much retirement savings to be considered bankrupt?