The Homeowner Bail Out

Yes, I am in favor of a homeowner bail out.

I was NOT in favor of the big bank bail out. Why? AIG sending its staff to an expensive retreat, after accepting $150 billion... Need I say more?

However, there are a LOT of ways that the government could help homeowners. Here's some random thoughts:

1. Lend homeowners enough money to redo their loans. Something like, original lender loan drops to the current value of the house, Feds lend homeowner enough $$ for a 1 to 3% interest second mortgage. And while they're at it, set up automatic payments according to the homeowners' paydays.
2. Matching funds, lender does a free refi, loan becomes a 30 - 40 - even 50 year fixed rate loan, Feds give lenders a matching amount of $$ for the amount the lender forgives on the loan. Naturally you would want a cap on this amount.
3. Drop interest rates. All mortgages drop off 2% on the interest rate, with the lowest rate being 5%, Feds give some fat tax breaks and incentive $$ to lenders.
4. Force lenders to allow homeowners to make bi-monthly payments, so it's easier to make payments according to the homeowners' paydays and budget.
5. Lenders forgive up to 3 months payments, get a tax break or incentive $$.
6. Don't let lenders do loans without an escrow account. That will stop lenders from playing games with the payment amounts. (I know this one, I was ASSURED that my loan would include the escrow -- well, at the last minute, when I was already committed and really had no choice, oops, that was wrong, didn't include the escrow. So I got screwed. Dude knew I was out of money, I couldn't start the process over with another lender. He got his commission and I got "did"...)
7. Freeze foreclosures for up to 6 months to give homeowners a chance to catch up, tack up to 6 months payments onto the end of the mortgage.

Naturally, all of these random thoughts should have limits. Lenders shouldn't have to suck up a 700,000 loan when the house value has dropped to 200,000. But they could refi the original amount into a lower interest rate, longer term, fixed rate loan. Why? Because if the homeowner sits tight for another 3 to 10 years, the house value WILL go up again.

But there are many, many ways that the Feds and the mortgage companies could help homeowners and at the same time, help themselves.

Why? Because if the mortgage market can be stabilized, the rest of the economy will also begin stabilizing.

The house of cards has already tumbled. Let's change the building materials back to brick and mortar and get our economy back on track.

I have to go now, time to get ready for work.

Think about it. In fact, think outside of the box.

This CAN be resolved without people losing their homes and the lenders not losing a lot of money. Stop saying "can't" and start asking "how"...

Banks, Banks and More Banks

Two more banks, 1st National Bank of Nevada and First Heritage Bank, in Nevada, Arizona and California, were taken over by the FDIC on Friday. Luckily for their customers, the banks will reopen on Monday as Mutual of Omaha Bank branches. Customers can still write checks and access funds with their ATM cards.

And IndyMac is defunct.

My best friend's mortgage is with IndyMac. I told her not to worry, the Feds will sell it off to some other bank. Despite all the dire news about mortgages and real estate, historically, as long as she can hang in there and make her payments, she'll be OK in the long run. She's struggling though.

I'm struggling too. I am having a really hard time right now. I had some unexpected expenses and am struggling to get my bills all paid on time. (I don't feel bad about my Internet bill though, I have dial up and pay $15 a month. It pays for itself with the stuff I sell online.) Between the mortgage and high gas costs, it's just hard right now.

I am not alone.

In my case, I was sort of duped into the loan I have right now. I HAD to refi, my mortgage had reset. I was doing OK except my [insert bad words here] contractor didn't finish the remodel in a timely way. So instead of being able to refi around the end of October as planned, I wasn't able to refi until MAY!!

Anyway, to add injury to insult, the mortgage company sent out an appraiser that vastly undervalued my property, so I wasn't able to get the loan I needed. (How do I know? I was trying to get a loan with my credit union and the appraiser valued the property $20,000 higher. I was ONE POINT too low on my FICO, so I didn't qualify for that good loan I wanted. Plus, I have a copy of my next door neighbor's appraisal, a smaller house, not as updated, that was $50,000 higher!! HELLO???)

So, I had to start the whole process again with another company. Then, I was dicked around until the last minute. I had no more money for a third appraisal or to start the process again. I was forced to take the loan I was offered, a much less desirable product. And then, to top it off, I was told that this loan would include the escrow account. NOT!

Again, at the very last minute, when I had no more choices, I was told that no, the payment did not include the escrow.

I was screwed and thus, back against the wall, I signed the paperwork.

I can hardly wait to refi again and as soon as I'm able, prepayment penalty or not, I am so out of this loan. I will NEVER do business with this company again. Never, ever, ever.

I am not alone.

I have talked to a number of people who've been pushed into the corner like I was, and then had a choice of refi or the mortgage payment would jump out of their reach. So they did what they had to do for the moment.

I am praying that this big bailout that Bush is supposed to sign this weekend will be the salvation, not for the companies, who deserve nothing but contempt for the way they've treated their customers, but for the consumers.

All I want is to refi one last time, get into a fixed rate loan, set up an automatic payment plan and get my finances back on track.

Oh, yeah, I almost forgot. I was told I could set up an automatic payment plan. NOT! It's not an option with the loan I have. I discovered that lie when I went online to check it out. Dang it all!!

Lies, lies and more lies.

No wonder banks and mortgage companies are going under. The weight of those lies is sucking them under.

My loan isn't with the banks that just went under, thank the good Lord. My mortgage company has managed to stay afloat -- so far.

And I will pull through this financial mess. The market will recover, there are already signs that houses ARE selling in my area. The market will stay flat for a while, but my house is actually still valued at close to what I owe, so I'm better off than many consumers.

My friend still has equity, so she is also better off than most.

But we'll still struggle for a while longer. As Jesus told us, through storms we shall pass.

The operative word is "PASS".

Links:
SFGate.com: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/25/financial/f214032D65.DTL
FDIC: www.fdic.gov/news/news/press/2008/pr08063.html
1st National Bank of Nevada: http://www.fnbaonlinehb.com/
First Heritage Bank: http://www.firstheritage.net/
Bush signs housing rescue bill: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/23/financial/f143741D94.DTL
Details of the bill: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/23/national/w123421D90.DTL