President Obama's Mortgage Relief Plan 2.0

[Gaspar]

[youtube]http://www.youtube.com/watch?feature=player_embedded&v=IndjjvA3C6c[/youtube]

[nathanm]

So it's a bad thing to let people refinance to a lower rate when we're already on the hook should the loan go bad?

There are actually two programs. HARP, which this video is riffing on, lets homeowners refinance agency-owned mortgages no matter what the LTV, so long as it reduces risk by either reducing the monthly payment, shortening the repayment period, or going from an exotic product to a more traditional product. (IO to fully amortizing ARM, ARM to 30 year, etc) This reduces credit risk for the agencies while either reducing the amount of time the homeowner is underwater or improving their cash flow situation.

The other is HAMP, which allows homeowners either in default or in imminent danger of default to seek a modification of the existing loan, whether through principal reductions, an increase in loan term, a reduction in interest rate, or a combination of those and some other options.

HARP refis have only been used by a million or two homeowners so far. HAMP has an even worse participation rate, but that's more due to servicers refusing to modify mortgages because they make more fees in foreclosure, even though recovery rates on foreclosed homes are in the toilet right now and the bondholders would almost always be better off with a modification than a foreclosure.

I'm not quite sure why you would think either of these programs is a bad thing...

[heironymouspasparagus]

So it's a bad thing to let people refinance to a lower rate when we're already on the hook should the loan go bad?

I'm not quite sure why you would think either of these programs is a bad thing...

Come on, nathan!  Think!!       O-B-A-M-A!!

That's the only reason doing things to help the situation could be a bad thing!

You remember how Rush Limbaugh and Sean Hannity were going on before the 2008 election for MONTHS about how they hoped Obama would fail if he was elected!  Meaning they hoped that America failed!  Well, since things are actually getting better, even if it is too slow, and both those continue to be wrong and continue their lies, their whole schtick is ringing hollow now.  That makes them all the more strident and shrill to try to get people back "in line".