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View Full Version : The Newest Mortgage Deal



Gerry Clinchy
03-05-2012, 11:14 PM
The govt got $25 billion from the big banks. $10 billion will go to help those with "under water" mortgages. (Wonder where the other $15 billion is going?)

Estimates are that only about 5% of those with "under water" mortgages will qualify (about 500,000 out of 11.2 million). One of the criteria for qualifying is that the owners already be delinquent in their mortgages.

Hmmm ... what are the chances of those people still defaulting on those mortgages even after they get the "deal"? What about the ones who struggled to keep their mortgage payments current? With this deal in the offing, maybe some of them will stop making their mortgage payments? Unanticipated consequences?

They may also be underestimating the level of "under water" of many of these homes.

Some samples in my area. One home with $163,000 mortgage, received an offer of $70,000 ... after 6 mos. on the market. I visited another home with a $205,000 mortgage that is on the market for $135,000. These are VERY big hits for just mid-range homes. May turn out that the $10 billion won't be enough to cover the 500,000 estimated to qualify for the new deal.

Essentially, these owners will be "forgiven" the difference between their present principal and the value of the home today. Should prove to be a windfall for the real estate appraisers.