I have to wonder if this program will be abused just like medicare has been - Medicare abuse is about something to the tune of around $60 billion dollars (From the Heritage Foundation a few years ago). It is my understanding that fraud is typically written into these types of programs. But at what cost? Who really pays for fraud and default and all that good stuff. I know this answer and I don't like it.
This is not meant to be judgemental message, just about social responsibility. I'm sure there are many folks that are in need of housing assistance b/c their LTV is way too high to do a traditional re fi. Things happen, sometimes that are not foreseen and are beyond our control.
I can tell you what I know - today I notorized for a coworker her mortgage papers - Making Home Affordable program through our government. Here is a girl shops non stop, she gets all sorts of nice things delivered to the office, like Nicole Miller dresses and christian louboutin shoes. Planning a wedding and honeymoon later this year. She apparently qualifies because she can no longer afford her mortgage payment with her current credit card debt, her words not mine. I love this too: Let's not forget the girl had two European vacations in 09 as well, and has been trying to get accepted into this program for "8 months". You mean you were working on a loan mod while you were trapsing around Greece, in your new vacation clothes?
My point is that a person like this gets accepted into this program, making it less available to the truly needy people, who probably were denied.
What's wrong with the system? Why can't the federal government look into past credit card statements as well? Let's look at peoples credit and get all their credit card statements as well. Let's see what are they buying that you need to have the governments help with your mortgage? I'll be happy to volunteer to take a look at credit card statement with a fine tooth comb. There are many honest people that are in need of the housing assistance not buying $450 dresses in the last 30 days...
Just my 2 cents.
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I have mixed feelings about this...I can completely see where you are coming from, I would have the same thoughts. But, having bought a house 1 1/2 years ago that has gone down in value from 283,000 to about 170,000, and I am the tail end of a development where the same house was as high as 390,000, many financed with methods, lets just say, no longer used...there are a lot of homes just being walked away from. Although she seems completely irresponsible, at least she is attempting to work something out. What would be nice is if people had to go into some type of debt counseling/closing of credit accounts or something like that for a time period.
I had a couple of friends that were in a very similar mode, buy, buy, buy, refinance, buy, buy, buy, refinance. That refi part isn't an option anymore. My friend committed suicide almost 5 years ago (not related to the finance situation) and I often wonder if she would be homeless today.
I know this is a complicated situation. The point is, she could afford her mortgage payment before, but no longer can b/c her current credit card debt. No longer afford your mortgage? Really? What about your five figure bonus? But you took one vacation that was 14 days long in Greece? You just bought a pair of shoes that are in excess of 500 bucks? Then she is asking me about buying a Benz...Nice, because no one who is asking for a handout should be thinking about buying a new car. Sorry, that doesn't cut it with me. What help do you really need? Sounds to me like financial counseling might be in order...One has to be responsible for their choices.
She decided to buy in an "up and coming area" are. These things happen in up and coming areas, so a risk assesment should have been done. I'd also bet a dollar to a donut that being a first time home buyer, she probably didn't put any money down. For the most part, our real estate is a pretty stable market in this particular area, as it was never really over inflated/over valued. But, there are exceptions with in the city.
She also has not been hit by tragedy - death of a spouse, illness, unemployment or anything of the like. She's just a little bit under water and cannot sell her place because she owes more on it than it is worth. A risk analysis should have been done prior to purchasing. Real Estate can be risky. Does that mean that we should bail out everyone who didn't make well thought out decisions? I think not.
Yeah, she is doing something about it, so kudos to her. But with my tax dollar, and that is where the problem lies.
Well, it seems that if your coworker can keep buying expensive clothes & taking European vacations AND qualify for this....then I should be able to do it too!
I thought you needed to be behind in your mortgage payments to qualify for this. Or am I wrong?? I wasn't willing to trash my credit just to be able to refi.
Hi Mo - I asked straight out if she had to default on her mortgage in order to qualify and she told me that wasn't the case. You see, normally, I'm a pretty nice person, but she is so darn insulting (at times I don't think she even realizes the negative comments that she makes) so I just had to ask. Because I told her that is what I thought exactly - that you had to be in default to qualify.
There are probably people that have been laid off, good honest, tax paying citizens that are living BELOW their means to in order make their mortgage payment. She gets approved, it takes away from the truly needy people who would benefit from the governments help.
Oh and I have NOT figured out yet how the Make Home Affordable program affect credit. The co worker did seem to think it would have a negative impact however,but I cannot confirm or deny. Remember, she also said that you don't have to be in default with your mortgage lender (and I don't believe this).
Coworker also said she is tired of living pay check to paycheck, well sweetheart, maybe if you got your compulsive shopping habits in check, you wouldn't have to live pay check to paycheck. No one wants to live pay check to pay check anyway. Ever meet a person who told you that they love living pay check to pay check?