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Negative Equity Fixed for Home Owners with American Home Ownership Resurgence Plan?

Well if you were like me sitting in my house watching the Presidential debates last night you were probably surprised (ok I thought I would fall out of my seat) to hear John McCain drop a bomb...a substantial new program for homeowners. Rolling the Dice on Mortgage Solutions I was sitting there wondering:

  • How many bailouts can our economy handle?
  • What are the details of this plan?

I heard New's pundits say the plan would cost $300 Billion dollars (Does anyone else remember when that was considered A LOT like of money?

Is anyone else getting numb and having a hard time keeping up with all the blank checks being written...$700 Billion here, oh I mean $850 Billion after $300 Billion more ).

Part of me thought, "I've gotta get a money printing machine like the Government has - if only our personal budgets worked that way". Now I'd definitely love to see our Pinellas Real Estate home prices stabilize, however, I seriously worry about the "unintended consequences" when the government start "managing our real estate market". This plan is targeted at home sellers facing foreclosure and those who own homes that are now worth less than they owe, hence the negative equity position. If you're not sure what your neighborhood values are doing - Get today's Pinellas Real Estate Market Report , a FREE service that gives you real time results based on the Pinellas Suncoast MLS today and see graphs and info for YOUR actually Pinellas County neighborhood.

John McCain's proposal for Home Sellers Facing Foreclosure

McCain's says the plan's goal is to keep families in their homes, avoid foreclosures, save failing neighborhoods, stabilize the housing market and attack the roots of our financial crisis. (We'd all like to see the housing market stablized)

Who benefits from new Home Mortgage Plan?

America’s families are bearing a heavy burden from falling housing prices, mortgage delinquencies, foreclosures, and a weak economy. (The assumption is because the had the wrong mortgage)

How will the Home Mortgage Plan work?

  • For those that cannot make payments, mortgages must be re-structured to put losses on the books and put homeowners in manageable mortgages.
  • Lenders in these cases must recognize the loss that they’ve already suffered.
  • The McCain Resurgence Plan would purchase mortgages directly from homeowners and mortgage servicers, and replace them with manageable, fixed-rate home mortgages that will keep families in their homes.
  • By purchasing the existing, failing home mortgages the McCain resurgence plan will eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets.

Who qualifies for American Home Ownership Resurgence Plan?

The McCain resurgence plan would be available to mortgage holders that:

  • Live in the home (primary residence only)
  • Can prove their creditworthiness at the time of the original loan (no falsifications and provided a down payment).

What kind of new mortgage would home owners get?

  • An FHA-guaranteed fixed-rate mortgage at terms manageable for the homeowner. (I'd love to know what this means in practice not theory)

What will this Home Owner Mortgage Plan Cost Taxpayers?

  • The direct cost of this plan would be roughly $300 billion because the purchase of mortgages would relieve homeowners of “negative equity” in some homes.
  • Funds will come from Congress recent financial market stabilization bill;

Their believe is that this plan could be implemented quickly as a result of the authorities provided in the stabilization bill, the recent housing bill, and the U.S. government's conservatorship of Fannie Mae and Freddie Mac. It may be necessary for Congress to raise the overall borrowing limit of FHA loans.

So I'm curious - do you think this plan is a good thing or a bad thing?

Comment balloon 9 commentsCyndee Haydon • October 08 2008 03:53PM


Cyndee, I probably should not be commenting on this, but I am going to.

 First, I feel that most of the "plans" that have been implemented or suggested are teaching our children that it's okay to put yourself in debt because the government will step in and take care of you.

Second, while I would personally "love" to see the market rebound, the way that I think it should be done is for the banks themselves to re-negotiate the failing loans with the homeowners. I honestly do not know why the banks haven't done this already. They can add on years or lower rates, whatever it takes, and still keep a family in their home, save their credit, reduce the foreclosures, etc.

 I'm just a Realtor and not an expert on how these things are done.

The "experts" are running the country into the ground while they fill their pockets.

To answer your question, no I do not think it is a good plan.

Posted by Karen Hurst, Rhode Island Waterfront! (RICOASTALLIVING.COM) over 10 years ago

No I don't like the plan, I don't like any plan that heads us into more socialism. But, it is less socialistic than Obama on many programs. We need a stateman, and I don't want Obama Commander in Chief, God help us if that happens. I'm getting ready to ignore the next 4 years.

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 10 years ago

Where ever the government is involved there is a nightmare around the corner.

Posted by Judy Tuscano, NH Real Estate Professional (Prudential Verani Realty) over 10 years ago

Hi Cyndee,

Sorry but I missed that portion of the debate. However I did hear another version where part of the re-negotation involves and equity participation when a home is sold.

I'd like to see more help with struggling home owners, yet I'm concerned about bail outs across the board.

Posted by Lynda Eisenmann, Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co (Preferred Home Brokers) over 10 years ago

This is really tough, and what I can tell you for certain is that the stock market DID NOT like it very much.  I will be VERY VERY interesting to see what transpires over the next few months, especially after the election.

I saw Joe Biden, coming up the opposite way on I-275 today, I was going South and they were headed north.  There were SO MANY State troopers is was crazy!

Did you see that the announcer introduced Joe Biden as "John McCain"?  Now that was funny!!!

Here is the clip, incase you missed it!

Posted by Katrina Madewell, Tampa FL Homes for sale | Tampa Bay - (813) 777-1196 (Charles Rutenberg Rlty- More than 5,000 agents(813) 777-1196) over 10 years ago

For one...I don't comment on my preference for president...let alone down the other one that I am not voting for. It's what we are teaching our children that matters. Regardless of the financial mess we're in....we really DON'T know any of these people....really.

No matter what all these 'PLANS' are beyond my comprehension. I might as well say I believe they had this all planned lol!

Bottom matter what they all surely seems our voices don't matter. They're just going to do what they want.

I do want some kind of change....I guess in my own little world I am changing what I need in my own life.

And whoever becomes president.....I will support.

I still wonder...what some of these people are teaching their children. To hate?

Posted by Celeste "SALLY" Cheeseman, (RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE (Liberty Homes) over 10 years ago

Cyndee--Aren't we political this morning? Nice to see you! :)

My two cents...

I wasn't happy about the first bailout plan. Tough to watch as these bailouts for Wall Street or Main Street (Aren't you sick of that line???). Especially after this morning they announced AIG will need millions more as they have spent the first pile of money they were given...What do they need another $440K executive retreat with spa treatments and golf games? This is the problem with bailouts. People making bad decisions get a pass; then get more money to go make bad decisions. Where's the justice for those who made the right decisions?

On the other hand though, if several of my neighbors made bad decisions and my home value would suffer if they all lost their homes, I can see where a plan like this might help by preventing several foreclosures that cause property values to plummet. I'd rather see help to homeowners than corporations who should have known better.

BUT the banks should have been doing this and taken the hits...not the government and taxpayers.  

Posted by Teri Eckholm, REALTOR Serving Mpls/St Paul North & East Metro (Boardman Realty) over 10 years ago

Let me 1st say I hate politics. While Obama talks about change he never discusses how he is going to go about doing it. At least with McCain like it or not he lays something out for you to at least think about.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Hey thanks for all your sharing your thoughts. I understand those that don't talk politics - I purposefully tried to stay away from that. 

In response to Sally's question about what are we teaching our children - my goal is "self reliance and a heart backed by action to help your neighbor with the ultimate goal for them to be self reliant as well (not to take anyone to raise - it's not good for them or us)

Ironically by helping our neighbors we do help ourselves since their "foreclosure" directly impacts our neighborhoods values - but help to me is different than bailouts with no accountability or responsibility.  

I personally (as I stated) believe in free markets - and am concerned that both candidates are veering from our American roots IMHO - I worry that America is walking a fine line towards Socialism - no one better than REALTORS know and see daily the families effected by this economy.

I don't think there are easy answers - just hope we implement well thought out solutions - and don't cause further problems.          

Posted by Cyndee Haydon, 727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes (Charles Rutenberg Realty) over 10 years ago