Bail out plan to help just 13% of borrowers in trouble
The bail out plan that Congress is hard at work trying to pass may not do much in terms of actually helping anyone. Government estimates show that only 400,000 people could benefit from the new FHA-driven refinance/loan modifications while more than 3,000,000 folks are actually 60 days down (or late) on their mortgage.
This refrain is all-to-common in trying to solve the mortgage mess. FHA Secure, remember that one? How many folks are being helped there? Not many. Loan modifications? You don’t see those coming through in huge numbers either. The tough reality is that with so much money at stake, so much declining equity, so much debt, so little additional borrowing capacity there is very little room to actually do something that works.
Or maybe the answer is doing little is the best answer.
A great article from the New York Times on the plight of lawmakers whose ham-handed attempts at help continue to fall short of main-street needs.
Those stark numbers not only illustrate the challenges for the lawmakers trying to provide some relief to their constituents but also hint at what the next administration will be facing after the election. While the proposed program would help some homeowners, analysts say it would touch only a small fraction of those in trouble — the Congressional Budget Office estimates it would be used by 400,000 borrowers — and would do little to bolster the housing market.
“It’s not enough, even in the best of circumstances,” said Mark Zandi, chief economist of Moody’s Economy.com. The number of people who will be helped “is going to be overwhelmed by the three million that are headed toward default.”
