Foreclosure rescure plan details & analysis
Everybody has an opinion on this one, and they vary wildly. I personally have a bit of a personal dilemma in balancing the need to help correct the market and punishing those who were responsible and took out loans they could repay. I haven't delved into the fine details of the plan yet but from the surface it appears to separate home owners into two groups:
1. Those that took out loans they would never be able to repay, no matter what the terms.
2. The rest of us who took out loans we knew we could afford, and often at a much lower amount then the bank would lend to us. We pay our mortgage each month, pay our taxes and live responsibly- and in our means. This same group has had their investments hammered by the financial crisis and seen the value of their own home decline as an innocent bystander.
I might sound a little cruel here, and there are exceptions to every situation. But those that loose their jobs and can't pay their mortgage aren't what has caused our problems. The borrowers that took our huge loans and never made a payment are the problem-and the banks who lent to them knowing it was likely the loan would not be repaid and thus sold the paper to an investor before it defaulted- are the problem.
From the surface it appears that what will happen is group #2 will literally pay for the mistake and misfortune of group #1. I could be all wet here, but when you take federal tax dollars to subsidize failing loans and provide monetary incentive to modify loans that's how I interpret it. On the plus side there are a couple of pretty smart people out there who think the plan will have a positive impact on housing, and that will benefit all of us.
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