Watch today and the rest of the week for a new phrase: success payments. That’s a proposal by the Obama Administration to help mortgage-holders with otherwise good credit get caught up and avoid foreclosure.
Mike Allen at Politico’s Playbook describes success payments and another component of the Administration’s proposal:
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1) If you have a good credit history and are in danger of falling badly behind (say, you’re one or two payments behind), SUCCESS PAYMENTS are matching government funds that give the bank an incentive not to foreclose.
2) If your mortgage is under water (you owe more than your house is worth), you can’t refinance. So the administration is going to open more funds to Fannie Mae and Freddie Mac so they can make it possible for you to refinance at the current lower rates.
So far, I haven’t read anything about how those success payment get paid back once the good-credit mortgage holders are back on their feet.
There there are those mortgage holders who are under water — they may be current in their payments but would like to seek relief through refinancing for a lower monthly payment.
Strictly speaking, the statement that you can’t refinance your mortgage if the mortgage is higher than the current market value of the house is misleading. The mortgage lender won’t refinance at the same amount because the house no longer qualifies as collateral for that amount. But you could pony up the difference in cold hard cash, paying the principal of the mortgage down to current market value. Then you and your house would qualify for the smaller mortgage.
I’m guessing that most home-owners can’t come up with the pony money.
Tags: barack obama, housing, Politics
