Friday, February 20, 2009

Obama’s Mortgage Plan - Thoughts

  1. The plan to allow borrowers, who are current on their mortgages that are insured by Fannie/Freddie, refinance their loans provided their loan is within 105% of the current home value is a no brainer. Although these loans are a little "high risk," allowing borrowers to convert their loans to lower, fixed rates should make them less likely to default. The fact I hope to qualify for a refi under this plan is a pleasant bonus.
  2. Subsidized Cram-Downs – The conservative in me views this as a government giveaway to borrowers who should never have been given the loans. I find it hard to justify paying my taxes to pay someone else's mortgage. I like my plan (voluntary cram down by lenders in return for government floor) better. Everyone benefits and the government subsidy is spread out more evenly.

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