Mortgage bailout package

[tagryn]

This blog had the best analysis I've run across of the proposed new mortgage bailout program, including 5 reasons why it probably won't have the intended effects. Summary quote, from the comments:

This program looks to be especially doomed. At first blush, it seems that about 80-90% of mortgages won't qualify - too far underwater, borrowers don't have adequate income, the loans aren't with Fannie or Freddie, there are 2nd's or HELOC's that would be wiped out so they won't cooperate. I foresee some people getting their 2% mortgages and their principal reductions, and a WHOLE lot more people who can't, and will scream bloody murder that their neighbor has gotten a killer deal, and they can't - and are subsidizing their neighbor's killer deal. I can't understand why the Administration would design a program that, for every one person it benefits, there are 8 or 9 other people screaming "Where's MY 2% mortgage and bailout??!!"

This article in this past Sunday's Washington Post also looked at what homeowners who don't qualify, but are still underwater with their mortgage (& therefore can't refinance), can do. Answer: not much, but it offered this sliver of long-term hope at the end:

"The purpose of the plan isn't to reach out to every individual who is hurting," Wachter said. "The bigger impact is stabilizing the housing market. If the plan is effective and the housing market finds its bottom, we may actually see a significant decline in foreclosures and an increase in housing prices."