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	Name:	4691 -
	Subject:	This is a silly analysis
	Date:	10/8/2008 10:22:48 PM

I've been trying to find valid details on this individual mortgage bailout called Homeownership Resurgence Plan. On Fox News earlier today it was said something like (I'm making up the numbers here) homeowner buys home for $300,000 and now it's only worth $200,000 and owner in default. The government pays off the $300,000 and the homeowner is given a new mortgage on the house at market value - $200,000. I interpreted this to mean the government (i.e.; tax payer) eats the $100,000 loss in value. This seems to be confirmed by the statement below which says the existing loan is retired and the difference between the two loans would be taxpayer contribution. It certainly does not read like the standard mortgage purchase between institutions.

I got this from the McCain website (link provided): ""Mechanically the initiative is very simple. A homeowner would initiate the process by calling a mortgage broker or other originator and basically saying 'I'd like to refinance my home.' They would start the underwriting process, verify incomes, this is an opportunity as well to make sure the program has in it appropriate checks to make sure that government money is not being given to folks who are not primary homeowners, who don't have adequate income, or otherwise, in the initial purchase of their home didn't provide valid information. These authorities could then be used to retire the existing loan. The FHA would issue a guaranteed thirty year fixed-rate mortgage at a manageable interest rate. The homeowner would stay in the home, their financial burden would be relieved, the valuation of the existing loan would be resolved, there would no longer be a threat of default or diminished capacity to repay. That would stabilize financial markets, and t he taxpayers' contribution would be, in some cases the difference between the values of those two loans, something which would be the necessity for taxpayer contribution."

Personally, I don't like this unless there are a lot of restrictions on who qualifies for government assistance. Some people in high cost housing areas have been buying homes they can't afford with the intention to flip in a year or two and make a big profit as the housing prices soared. Now the tax payer has to cover their gamble? (Maybe the tax payer can cover my recent 401K losses as well!)

URL: Homeownership Resurgence Plan