Whose House is Being Saved by Obama?

[preachinjesus]

http://money.cnn.com/2011/02/01/real_estate/hamp_modifications/index.htm?hpt=Sbin

This is a pretty concise article talking about the loan modification program led by the current administration.

While I hope the sniping at the current administration will be kept to a minimum...lol I know, what am I thinking?...I did find this paragraph to be compelling.

Median household income for them was just $46,000, well short of affluent. Their credit scores averaged about 570 at the time of modification, which would, under today's lending conditions, prevent them from obtaining loans. Their mortgage balances -- after modification -- averaged $232,000. That is about five times median household income, about double what they'd usually be allowed to borrow on income of $46,000.

This really shows us where much of the economic failure came from...people living way beyond their means and being able to secure huge amounts of credit with little to no income backing.

And the sad thing is nothing has changed. Anyone of us could walk into a bank right now, give them minimum income verification, and walk out with a loan for a large house.

 

[targus]

In the example above the payment with taxes and insurance most likely be 50% of their net pay each month.

That is insane !!

 

[carpro]

To begin with, the reason they are falling behind on their mortgages isn't because their loans are unaffordable, according to a report released Monday by the Treasury Department.
Instead, defaults are stemming from the weak economy and unemployment: In December, 60% of the borrowers who received permanent HAMP mods were facing a loss of income. Just 11% were the result of unaffordable mortgages.

Baloney. These kind of faulty(if not phony) conclusions are exactly what will lead lenders and buyers righ back down the same road.

Anyone with any experience at mortgage lending can tell you they simply overbought.
They were likely only one missed paycheck away form default from the word go.

I know many people who have lost their jobs and managed to keep up payments until they could secure new employment. Me included. But I never bought a home that the loan principal was more than two and a half times my annual income,

And none of the people I know who kept up their payments were one missed paycheck away from default, either.

 

[carpro]

In the example above the payment with taxes and insurance most likely be 50% of their net pay each month.

That is insane !!

It shouldn't have been more than 30%.