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The Mortgage Bailout

Details have been released on the proposed mortgage bailout.

It appears that banks will be invited to lower the interest rate and/or the principal to get the borrower’s payment down to 31% of their income. This should result in a cost to the bank that’s less that that of foreclosure. In theory. Given that the cost of foreclosure is estimated to be as high as 50% of the home’s value, the loan modification plan may save us all some money in the long term. The government is going to offer banks a portion of their expense, a dollar for dollar match to reduce the expense ratio from 38% to 31%, but it seems the bank has to first fund the plan to get down to 38%. I don’t know if the President received my note suggesting that we implement a clawback on all overpaid bankers’ income goung back for the last decade, that would fund much if not all of this plan.

Joe

  • V. Fogarty March 10, 2009, 2:10 pm

    I am 100% AGAINST any bailout of homeowners who lived high on the hog and now the savers should pay to have the mortgages reduced? No rewards for bad behavior!!!!!!!!!!!!!!!!! You might want to envison how many seniors feel about the bailout — they get less than 1% interest on their savings and retirement accounts — while those who acted like drunken sailors are rewarded with lower payments on their homes. And what about this so-called free money that those being bailed out will be getting — should they not owe Uncle Sam Federal Tax and their respective states State income tax on the freebees?

    For the next few years seniors will be getting next to nothing in interest on their savings accounts supposed to be giving them the “good life” they saved up for. Now thanks to the politicians they will be scrimping and doing without just to bailout these undeserving jerks.

    Sign me angry and waiting for the 2010 election!!!!!!!!!!

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