Mooseman
Isengar Tussle
OK. By now most of you should have heard or read about the housing rescue bill, but I'll highlight the major points.
1) Lenders to make major concessions, writing down the value of the loan to 90% of the home's current value
I like this, since it says to lenders..... you were idiots for lending that much for this property, you are going to lose money......
2) Loans have to be issued between January 2005 and June 2007
3) Borrowers must be spending at least 31% of their gross monthly income on mortgage debt.
4) Borrowers must prove that they will not be able to keep paying their existing mortgage.
5) If the original lender agrees to the write down, the new lender buys the old loan and takes over the reworked mortgage. As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal
Wow, this is tough on the lenders........ Good
6) Borrowers pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.
7) Borrowers share a percentage of the profits with the FHA when they sell the property (ranges from 90% in year 1, to 50% for all years 5+)
8) All loans are FIXED-RATE loans....
OK, this seems like a good idea, what am I missing? Where do the tax payers get screwed?
1) Lenders to make major concessions, writing down the value of the loan to 90% of the home's current value
I like this, since it says to lenders..... you were idiots for lending that much for this property, you are going to lose money......
2) Loans have to be issued between January 2005 and June 2007
3) Borrowers must be spending at least 31% of their gross monthly income on mortgage debt.
4) Borrowers must prove that they will not be able to keep paying their existing mortgage.
5) If the original lender agrees to the write down, the new lender buys the old loan and takes over the reworked mortgage. As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal
Wow, this is tough on the lenders........ Good
6) Borrowers pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.
7) Borrowers share a percentage of the profits with the FHA when they sell the property (ranges from 90% in year 1, to 50% for all years 5+)
8) All loans are FIXED-RATE loans....
OK, this seems like a good idea, what am I missing? Where do the tax payers get screwed?