They’re still being very quiet about this as of this morning, but rumors are flying, as reported by the Associated Press, that the government has an even newer plan for distressed homeowners who need foreclosure help.
The deal is cooking that will give about 3 million of these owners who face house foreclosures easy mortgages for about 5 years.
Translated that means about $50 billion of the $500 billion bailout will modify mortgages at 3% for the next 5 years for these folks who are in danger of losing their homes. Forget the fact that many of them probably shouldn’t have received the loans in the first place and maybe can’t hold on after the 5 years are up. But maybe I’m just not senstive enough…
Of course, all of this could go down the tubes. It’s not a done deal yet.
But it kind of concerns those of us who are conservative real estate investors and didn’t fall for a lot of the hype during the last boom market.
That’s because we understand ARM’s.
We know that a "balloon payment" will happen at some point.
Apparently a lot of these distressed owners didn’t know that.
So I propose that the No child Left Behind Program should teach every high school student something about mortgages and especially ARM’s. Maybe we’ll be able to avoid all this boiling cauldron full of distressed properties trouble in the future.
Read Sources: Government Prepares Loan Modification Plan