$275 Billion Housing Bailout
Below are the details of Obama’s foreclosures plans. My only worry is that there won’t be enough principle reductions that take place. I know this may frustrate many because it is a “free lunch” so to speak but I think it has to be done for those who are over $100,000 upside down.
“The plan, which could cost as much as $275 billion, will enable as many as five million homeowners who have little equity in their homes — or even owe slightly more than their homes are worth — to refinance loans through government-controlled mortgage giants Fannie Mae and Freddie Mac. The administration set aside $200 billion in new backing for the pair, which will play a central role in the rescue.
In addition, the government plans to spend $75 billion to encourage lenders to modify loan terms for people at risk of foreclosure or already in foreclosure proceedings. Lenders and the government would jointly lower monthly payments to 31% of homeowners’ income. To encourage servicers, the plan includes incentives such as $1,000-a-year “pay for success” fees if a borrower stays current on the loan.”