New Bailout for Underwater Homeowners?
The new ‘bailout’ announced by mortgage giants Fannie Mae and Freddie Mac isn’t like any of the foreclosure prevention programs we’ve seen so far, except perhaps in its controversy and questions over how many it will really help. This new plan offers to assist non-delinquent, underwater homeowners get out of their homes by eliminating the underwater portion of their debt. We know there are somewhere between 7 and 14 million U.S. homeowners out there in a negative equity situation, many are struggling, but those that haven’t been able to keep up payments won’t qualify under this new program. Some borrowers that have been considering ‘strategic defaults’ may be tempted to take advantage of this option if moving is really a must, but it definitely won’t be as attractive now as it would have several years ago. This is especially true as they could still be asked to contribute or pay back the non-underwater portion of their mortgages. Plus it hands these properties, which are assumed to be in better shape back to mortgage giants just as home values are rising. Guess who stands to win the most! On bright side this could also fuel the housing market with properties for real estate investors to quash worries of tightening inventory, and provide them with better quality merchandise. For those that haven’t been able to keep up payments or are already in foreclosure this should finally kick in the realization that they really need to turn to real estate investors for help as little is likely to come from anywhere else.
A new bailout for America’s homeowners has just been announced, but this one is different. Who will it help and what does it mean for those left out in the cold?