Mortgage Foreclosure Program...Another 'Pass-Through" to banks?

[WhiskeyGirl]

Only cases in which the cost of foreclosure would be higher than the cost of modification will qualify.

I never understood what that meant.  How does the 'bank' determine that? 

Fannie Mae and Freddie Mac are receiving thousands of applications under the Obama administration plan, which allows those with Fannie Mae (FNM, Fortune 500) or Freddie Mac (FRE, Fortune 500) loans to refinance their mortgages even if they owe up to 105% of the home's value.

This doesn't seem to help people who used their own hard earned money as a downpayment.  I know of one person that used their life savings of $40,000 for a home, that is now worth much less than they bought it for.  They've lost their life savings and aren't eligible.  No help for those that use their own money and are in trouble.  Or, those that sold an existing home and traded up.

This article has a color coded map of where banks are failing.  California really stands out.  Are these banks failing because home have been abandonded?  Help to late for many homes?

http://money.cnn.com/2009/05/14/news/economy/Obama_foreclosure_update/?postversion=2009051414

The article also uses some numbers.  The "$10 billion dollar program" to be expanded...it's helped 55,000 homeowners so far.  $10 billion / 55,000 =  $1,363,636.36 per person helped.

It is just mind boggling that they spent $1,363,636 to help one person, one mortgage.  What exactly did they spend all that money on?  Is spending over $1 million dollars per mortage cost efficient? 

Would it be cheaper to bulldoze these homes and write off the mortgage?  The program only works for "Mortgage holders who live in their homes and have loans of no more than $729,750 originated before Jan. 1 are eligible." 

If I look at this one way, it's like spending as much as the existing mortgage or more than the existing mortgage to 'save' the mortgage.    

$75 billion / 55,000 (people helped) =  $1,363,636.36

$1,363,636.36 - $729,750 (max of loans) =  $633,886.36 Administrative fee?  Money lost?  Wasted?  Disappeared? 

If the loan is less than the max, the lost money is greater.  Where is all the money going?

When I look at the money spent, compared to the 'maximum' it seems like more people should have been helped -

$75 billion / $729,750 = 102,774.9229 (number of people with max loans) that could be helped.  If the loans are less than the max, more people could have been helped.

The program has only helped about half that (55,000).

Where is the money going?  Why haven't they helped more?  Is the government spend two or three times the value of the outstanding mortgage to help people?  Now, the government wants to spend more?

Where is the money going?

Does someone out there have some better numbers?  Maybe could put this into perspective?

[WhiskeyGirl]

Where are the millions being helped?  What about those that have lost their life savings and downpayments?

Here is one letter -

"Mr. President: What can be done to assist homeowners paying their mortgages but facing significant losses in equity? As a category, it is difficult for these responsible people to refinance into the more favorable mortgages now available."
HelenKathryn, Seattle, WA

Here is the response -

The Making Home Affordable Refinance Program is designed specifically to help those whose home values may have fallen relative to their mortgage values.  The program is available to homeowners with a first loan, owned or guaranteed by Fannie Mae or Freddie Mac, that is 80-105% of the value of the home. 

We're focused on getting as many families as possible who are struggling with their mortgages into a mortgage that they can afford.  The Home Affordable Modification Program gets the borrower's interest rates and monthly payments down to a level they can afford in a way that is most cost effective for taxpayers.  That will keep millions from being foreclosed on.  Our plan permits lenders to get to a level of affordability in a variety of ways, including reducing interest rates, extending terms, or writing down principal.  In addition, we have incorporated principal write downs into our incentive structure in a productive way - success payments to homeowners are available to help pay down principal more quickly.

 

http://www.makinghomeaffordable.gov/asked-and-answered.html

Where are the millions being helped?  What are the "success payments" and does everyone qualify?  How exactly does that work?

From the CNN link in the OP -

More than 55,000 troubled homeowners have received loan modification offers under President Obama's foreclosure prevention program, officials said Thursday.

Where are the millions?  Now, they want more?  I know many folks in foreclosure, but none that qualified for the government program.  Is it because we as a group aren't part of the problem in California? 

What is the state by state distribution of money?

[WhiskeyGirl]

In a nutshell, it seems like the Obama administration continues to reward those that engaged in risky behavior, including those that closed on their home prior to 12-31-08.  No help for Main Street.

Somehow, I imagine that there are many on Main Street that have lived in the same house for more than 10 years.  Perhaps their mortgage is very small compared to the present value of the home, or the value of a mortgage someone took out on 12-30-08.  Where is the help for this person?  Someone on old Main Street, before the liar loans, casino banking, and job losses?

It seems like Obama and taxpayers could have PAID OFF millions of older mortgages for a fraction of what these new problem mortgages cost.  Would it have given peace of mind to millions on Main Street to have no mortgage when they enter retirement?  Maybe it wouldn't be quite so worrisome that Social Security and Medicare is bankrupt?

The Obama administration and shadow government continues to reward profit mongers on Wall Street, those with ties to the Federal Reserve and Treasure, and large global financial wheeling and dealing at the expense of old Main Street.  It seems fitting for a president (and his wifet) that doesn't find much to be proud of.  Welcome the new 'anti-American Administration' - there is no money.  Obama never told America how he was planning to pay for all his spending/stealing.

just my humble opinions