Mortgage Bail out bill passed Senate...What is this??

[Stilltheone]

My husband mentioned something to me this morning about the senate passing a mortgage bail out bill...If you're upside down in your mortgage, you could refinance at 85% LTV...Is this true!?!??

We're upside down by about $15K and this would be a huge relief to be able to do this. We owe $260K, worth $245...If we refinance at 85%, our mortgage would be $208K!!

Anyone have anymore info on it?

[Scott50]

not another govt bail out...

[Stilltheone]

not another govt bail out...

I wasn't asking to be ridiculed about it...just curious what the "specifics" are about it.

[JRScott]

Well passing the Senate is not enough, did it also pass the House?

[WhatMoney]

The bill is on the Senate floor now - I haven't heard of any final vote yet.
It's short title is the Housing and Economic Recovery Act of 2008

As usual the conservative Republicans are against it, and everyone else think's it needed in some form or another. Of course if has to go back to the House to work out compromises. The bill was already passed by the House last year. Once both Houses of congress agree, it will go to Bush, who has promised to veto it.

It will probably get enough votes in the Senate to override Bush's veto. Some Repubilican congressmen have figured out there is housing trouble in their Red states, and are worried about not getting re-elected.

Here's the whole bill before the Senate, all 631 pages of it:

http://banking.senate.gov/public/_fi...O08900_xml.pdf

and the summary of the bill, it you are a Readers Digest type. Condensed from 631 pages to just 4 pages:

http://banking.senate.gov/public/_fi...ActSummary.pdf

.

[Flamingo]

"3. No windfall for borrowers. Borrowers will share their new equity and future appreciation equally with FHA. Borrowers will pay for the FHA insurance."

To the OP - I believe you have to be facing foreclosure (not just be upside down) and there are requirements as to the coverage of future equity in the house after the new mortgage goes into place. I heard about this on the news the other day and knew there loans associated with this program and that the main purpose was to try to stop foreclosures with this practice, but it doesn't give the debtor any free equity in the house. You just mention you are upside down - I don't know if you are in the throws of foreclosure....

[AngelinaCatHub]

Flamingo, excellent: Please 'Stilltheone', here, nobody is attempting attack. The real world is, free market place. On good faith, we borrow, on good faith, they lend, things can go wrong. We have a wonderful Country, and be pleased we have an "out" when things do not go well. This place is a place of HEALING. We will all get by, and heal. I wish you well, but we have to bail ourselve out. No one has forced us into our problems and situations occur. God love you, and hang in. 'Hub

[JRScott]

I'm personally against the bailout because the government doesn't have the money. We can't borrow our way out of debt, it never works.

I'm also somewhat afraid that house flippers and speculators will end up benefiting more than homeowners. Even if they split the proceeds 50/50 with the government, that's still better than getting nothing. So they'll walk away with a profit while screwing the rest of us into paying for their foolishness.

I suppose that concern would be lifted if there was a homestead clause. That is require it to be the residence of the people seeking refinance. Still though I'd like to see cuts in other spending to pay for it made mandatory in the bill.

To me it goes back to the old, If it sounds to good to be true, it probably is. That's how I feel about the situation. Many subprime buyers bought more home than they could afford. Many subprime lenders sold more home than they knew the people could afford. They both counted on the prices continuing to rise. The first in hopes of refinancing. The second in hopes that if the buyer failed to pay they could foreclose and still sell it for more money. I'm not saying everyone did this but it was a primary driving force of the subprime market.

[WhatMoney]

As usual JRScott, you spout off your general anti-government rhetoric without bothering to actually read the details.

I'm also somewhat afraid that house flippers and speculators will end up benefiting more than homeowners. Even if they split the proceeds 50/50 with the government, that's still better than getting nothing. So they'll walk away with a profit while screwing the rest of us into paying for their foolishness.

from the bill summary:
Eligible Borrowers. Only owner-occupants who are unable to afford their mortgage payments are eligible for the program. No investors or investor properties will qualify. Homeowners must certify, under penalty of law, that they have not intentionally defaulted on their loan to qualify for the program and must have a mortgage debt to income ratio greater than 31 percent as of March 1, 2008.

Program Size. The program is authorized to insure up to $300 billion in mortgages and is expected to serve approximately 400,000 homeowners.

I'm personally against the bailout because the government doesn't have the money.

Program Sunset. The program will begin October 1, 2008 and sunset on September 30, 2011. CBO say the program will net nearly $250 million for taxpayers. The program is paid for by using part of the Affordable Housing Trust Fund; the GSE bill provides a further $2 billion cushion for the government by establishing a reserve fund at Treasury over ten years. If the program costs less than projected, the unused funds are returned to the Affordable Housing Trust Fund. If the program more than pays for itself (as was the case during the Roosevelt Administration), any excess savings are dedicated to reducing the national debt.

[JRScott]

Where does the reserve fund come from? What reserves? In essence our government has no reserve funds, they spend more than they take in every day.

On the first part all the flipper has to do is occupy the house and claim it as a residence. How closely will they watch the filings? I doubt they go and physically verify every case. There is no stipulation in the bill for how long you have to occupy the building before claiming occupancy either.