…IF AND ONLY IF their mortgages are owned or guaranteed by Fannie Mae or Freddie Mac.
“The American Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods,” OBAMA said. “While this crisis is vast, it begins just one house and one family at a time.”
So the stimulus package has been signed and it only helps homeowners who have mortgages backed by Fannie Mae and Freddie Mac. That means it helps people who owe $417K or less on their homes. As a mortgage broker centralized in the Bay Area this does not help the home owners who need the help.
I was talking to a homeowner last week who purchased in 2006 at the peak of the market and paid $850K for his home which will now appraise for $425K. His mortgage is not backed by Fannie Mae so he therefore has no options for improving his situation. The problem over all is NOT Fannie Mae backed loans, those actually perform rather well all things considered. The problem is the Mortgages ranging from $450K to 2M+ that were originated between March of 2005 and July of 2007. These people in particular are the ones in trouble and the ones without options in our current lending environment. While we have temporary loan limits in high cost areas such as Alameda County for $625,500 the guidelines are so strict that there are few opportunities for home owners due to current market values. If they purchased in the timeline mentioned above they have no options and many face adjusting payments.
It seems to me, if there is no help for the Alt A and Sub Prime financing of this time period there will be no economic recovery no matter how many trillions we spend.
More expensive than expected, Obama’s plan aims to keep between 7 million and 9 million people from foreclosure. Of the nearly 52 million U.S. homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their house is now worth
