02-19-2009, 03:58 PM
Dakota wrote:
[quote=$tevie]
You refinance the mortgage at 4% instead of 8% which lowers the payment from, say, $735 to $475.
If it was that simple don't you think somebody outside the renowned MacResources Forum 'Friendly" Political Ranting blog would have thought of it? There are all sorts of barriers to refinancing. Unless you address them you don't have a plan.
Um, people have thought of it and that is exactly what this plan addresses. It gives incentives to lenders to modify the loan to a lower interest rate, whereas before it was being requested as a voluntary sacrifice by the lenders (as if). It is an effort to remove the barriers that were preventing loan modification. This means that 1. more people can stay in their homes and 2. banks will no longer be holding as many so-called toxic loans which will mean they will have less negative assets. It does not lower the amount you owe on the house, it lowers the interest and thus the mortgage payment. You will still owe the same principal as you did before. It actually is not intended to benefit someone who bought a $900,000 house that they could never possibly afford, those people are probably still screwed since their mortgage exceeds the top amount eligible, so you can rest easier there. It is intended to help someone for whom a payment of $475 as opposed to $735 (or whatever) is going to mean the difference between foreclosure and no foreclosure.