Friday, July 25, 2008

Will The Mortgage Bail-Out Help You?

If you were smart and didn't buy more than you could afford, paid you bills on time, and did what you were supposed to do, probably not. But there are some very interesting stipulations on the bailout, assuming it passes as-is:

Via CNN-
Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 40% of their gross monthly income on all household debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.

It looks like it's going to by a bit harder than some people were hoping for to get the handout, and the "no new loans for 5-years" is very interesting. And the "borrowers must live in thier homes" seems to mean that all these house-flipping douchebags may not be getting any help at all. Outstanding. As bad of an idea as this was in the first place, it appears that Congress actually put a little thought into thier "solution". Color me surprised.


JTapp said...

The bill also contains other less-publicized provisions like tax credits for 1st-time home buyers.

Greatmoose said...

Yeah, saw that. Also just saw something I have a REAL problem with, on page 11, ALL electronic purchases (credit card, whatever) will be reported to the IRS. WTF? How is that even remotely legal?