Friday, Jul 25, 2008
Details of the US Housing Bill Provisions - No Mercy for Liar Loans
NY Times: Housing Bill Has Something for Nearly Everyone
This is a good rundown of the provisions in the new US Housing Bill - not as bad as it seems as it is aimed largely at ordinary homeowners. Anyone applying for help has to have taken out their mortgage before January 2008 and has to verify their income. Second homes and investment properties are also excluded from the provisions. So anyone who lied to buy or engaged in property flipping will be left to crash and burn.
Wouldn't be surprised to see a carbon copy, adjusted only for British-English spelling, to appear before the House of Commons very soon!!
Posted by an bearin bui @ 03:22 PM (290 views) Add Comment
3 Comments
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1. alan said...
The government must do something. But....
Personally, I would hate it if all those folk who lied to get loans got a let-off. People who bought a dozen Buy to Lets as a get rich scheme need to suffer the consequences of their stupidity.
2. paul said...
If you look at the terms, it is letting off the people who overstretched themselves to buy a primary residence and are now facing foreclosure.
The government has dressed it up to look like a haircut but actually it isn't:
"If you manage to get a new loan, you cannot take out a home equity loan for at least five years after you get the new mortgage. You will also have to pay a 1.5 percent fee each year on the remaining balance."
Thing is, house prices just won't go up for at least the next five years, so no problems there. The people this will benefit then are those whose existing rates are 1.5% or more above the new lower loan rate.
The Fed will have arranged this with the large banks not to take too much profit away from them, so i doubt it will help a significant number apart from those who would probably go bankrupt anyway eventually.
3. paul said...
Economically speaking, this is a heroin fix for a dying addict though.
It is also morally wrong.