Obama 101

[BKINAZ]

It is my understanding that Obama's plan calls for mortgages to be shot down to around 31% of your income.

What are the variables in determining that 31%? I think...it's actually between 31%31%-38% is what they are shooting for?

So what bills are included...and that's against GROSS(?) income? Gross-house payments- car payments-???. Down to dog food and memberships to a gym???

[fltoo]

How does the loan modification program work?

This program applies to borrowers who are unable to make -- or are struggling to make -- mortgage payments that exceed 38% of their monthly income. If the lender agrees to lower the interest rate or reduce the principal amount to bring the payment to 38% of the borrower's income, the government will pay half of the additional cost to the lender to reduce the payment to 31% of the borrower's income.

Isn't this just rewarding people for making bad decisions and irresponsibly getting in over their heads?

The Obama administration says the loan modification plan will exclude speculators and borrowers with high debts. Homeowners must live in the house in question, document their income and demonstrate an ability to make the new payment for an extended period of time.

How are these programs different from what was already available?

Unlike foreclosure-prevention efforts, both of the new programs are available to people who aren't yet behind on their payments. In fact, in the loan modification program, the government will pay mortgage servicers a higher incentive fee -- $1,500 instead of $1,000 -- if they modify a loan before a borrower goes into default.

What if I'm already in foreclosure?

It is up to your lender to decide whether it wants to participate in the program. The Obama plan increases the financial incentives for lenders to participate.

What if I file for bankruptcy protection?

Currently, bankruptcy law does not permit judges to modify the terms of mortgages for borrowers in bankruptcy. The Obama administration wants Congress to amend the law to give judges that power, but many lawmakers oppose the idea.

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Sorry, could not get the link to post on this.

[Over our heads]

Welp, I have to say, that our mortgage payments actually are 50% of takehome pay. But we did that to ourselves by taking out a 2nd and trying to pay of cc's. We were obviously in denial. So, we will pay ever dime of it, and after we get this BK business done with, we will attack it with a vengance.

And actually in our case, and maybe even other people, our mortgage payments will keep us out of a 13.

I just hope that they can come up with a reasonable and feasable way to keep hard working people from being forclosed upon by lenders who are unwilling to modify loans.

[BKINAZ]

Not sure that answered my question(s) flto...lemme try again.

Our mortgage payment is 40% of our income. Now mind you...again I am in the perfect storm right now in that I usually make more than I do currently. Having lost my biggest client (went out of business) I cannt assume I can get that money back in time.

So...it is 40% of our current income...now because of my other debt am I not allowed to do Obama's program? Or is it JUST based on income to mortgage? I assume I need to include everything...

[fltoo]

I honestly don't know how they are going to do this.

Normally there are 2 ratios, a front ratio which is your principle, interest, taxes, insurance only and a back ratio based on ALL debt including mortgage payment, based on gross salary.

I have a feeling that people interested in this program are going to get so many conflicting views and interpretations.........caveat emptor.

Do your homework.

[BKINAZ]

You're right...

That's what I am doing...I just want to have those ducks in a row and all.

[Overmylimit]

Buyer beware for sure....I hope we get some help from all of this

[Flamingo]

On CNN late last night, they had a financial expert on hand to try to explain the provisions of the program. She first stated that she had not seen such a confusing mess in her career and after reading all the provisions she stated she probably needed to go back to school and get a PHD in order to comprehend it all. What does that tell you...

[SubPrimeME]

Amazing... didn't we just go through a loan modification period, where little to noone was able to get modified? Part of me just thinks we need to let the fall happen, this band-aid approach is just costing us all more in the long run. 225 Billion was the number for this. 850 billion last week, 750 billion a couple of months ago, I mean, I know the governemt has their own money making machine, but how can this be a good long term decision?!?

[albacore44]

smoke and mirrors

This plan is only window dressing. it will not help if you are upside down like most are in the western states. The best plan is SB 61, if they can get the language right. the only real solution is full scale re-valuation of properties, then principal reduction down to 80% of their market value. despite all this try to make people feel better talk from Obama, it's only going to get worse. just take for example most of those posting on this forum in distress. it's because they lost all their equity and their home is upside down, so they decide to walk. i'm in my mid 50's, worked at the same company for 30 years, and been through 4 downturns. but i have never seen anything like what is going on in the housing market today.........and never been as fearful.