It was, and still is, a great idea to allow underwater homeowners to refinance to current low rates. People that are in adjustable loans, to fix their rates. People that bought with a 5% rate or above, could get 4 or below right now. On a 300k loan, that would save the borrower almost 200 per month.
But, is that enough to keep someone in their home? Hmmmmm....., lost your job, 200 isn't much. Cut back at work, 200 still isn't that much. Home upside down, is 200 a month worth it?
Or, for the many that can still afford their home, but are completely upside down....those ones that are seeing the defaults happening, the ones that are obviously the 'strategic defaults'? This group would probably be pleased with saving 200 per month. And pleasing some helps many. Pleasing even just a few helps avoid additional defaults and subsequent foreclosures.
It doesn't surprise me that one of our Californian senators is pushing to get these tweaks in the refinance program to work. And, really, whether the bank is earning 4 or 5 or 6%, wouldn't they rather earn something, than nothing? Well, yes, they get help when they have to foreclose. But, certainly the recovery would be faster if the foreclosure rate was reduced.
Full article that prompted my sharing of thoughts with you today: