FHFA's New Mortgage Program Offers Lower Paymentsby Gerri Willis
While many economists are pointing to a housing recovery, Uncle Sam seems to think the market still needs his help.
Another government program is being rolled out to lower monthly mortgage payments for struggling homeowners.
Here's what makes this program different from the countless others already out there, those with mortgages backed by Fannie and Freddie will no longer have to provide documents proving financial hardship!
Under the streamlined program, borrowers will get their payments reduced by changing interest rates, extending the length of the loan and principal forbearance.
It's not free money. Homeowners will have to go through a trial period where they have to pay at least three payments.
The Obama administration has been pressuring Fannie and Freddie and the Federal Housing Agency to do more to help homeowners, saying, “Right now, there's a bill in this Congress that would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today's rates. Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill. Right now, overlapping regulations keep responsible young families from buying their first home. What's holding us back? Let's streamline the process, and help our economy grow.”
But, Acting Director Ed DeMarco says it's simple. Forgiving these delinquent loans would be too costly, especially for taxpayers.
He's right: Fannie and Freddie are paying mortgage servicers to process each modification. They will, in turn, absorb the losses, and their money is really our money.
The two companies still owe taxpayers more than $135 billion from the bailout. These programs are just more incentives for homeowners not to pay what they owe, and this administration keeps helping those that are not helping themselves.
This is not making the economy better. It's just making more people dependent on the government, and once you get a handout - the only thing that accomplishes is the desire for more.