©
The federal $75 million Making Home Affordable program is supposed to keep some of the 5 million Americans on the verge of foreclosure from losing their homes.
That's if the loans they want to refinance are backed by the federal mortgage companies Fannie Mae and Freddie Mac. And if they don't have a second mortgage or private mortgage insurance that can hinder refinancing. And if the cost of refinancing is worth the lower interest rates. And if lenders have been able to update their computer systems to work with the program.
And, it turns out, if homeowners don't mind watching their credit scores drop by as much as 100 points.
It seems logical that a person might damage a credit score by entering a program for those close to defaulting on a mortgage. Other lenders would be interested to know that. It's also true that the blow to a home-owner's credit report is far worse from a foreclosure than from taking part in a program to prevent one. On a scale of 300 to 850, a foreclosure can subtract 150 points and ruin credit worthiness for years.
Still, troubled homeowners don't need any surprises when they're already down. The government should make it clearer to interested homeowners that their credit scores could take a hit simply by applying, even if they never miss a payment.
Then a homeowner could properly weigh the costs and benefits of "Making Home Affordable."
The housing market remains so stalled and the program has been so slow to render aid that the government has extended it for a year, until June 2011.
It could begin to improve the program immediately by updating its Web site - makinghomeaffordable.gov - to let people know about an unintended consequence.
Delicious
Digg
Reddit
Facebook
Twitter
Google
Yahoo
Politicians should be given
Politicians should be given a credit score based on how they vote and spend taxpayer money. Sorry Barney, the Freddie and Fannie debacle is going to cost you 200 points. Sorry Charlie, your inability to pay your taxes properly when you are the one writing the tax laws is going to cost you 500 points. When their scores get to low, they should not be allowed to vote or draft new legislation as they have been proven to be credit risks. The health care bill is too new to rate for credit, but any member of Congress that has been in office should lose 50 points per year for how Social Security has been managed to date.
Wow 75 million
So after we,the taxpayers, dish out hundreds of billions of dollar to bail out wall street, uncle sam is gonna insult the american people with a 75 million dollar program to kill you credit score?
I'm all about financial responsibility but it doesn't make sense to me that the gov't lets wall street get away with murder and dump billions of dollars on them with very little strings attached. But all the gov't is willing to do for the american taxpayer is help out a lil while crippling your credit. It just seems like a double standard. I personally have no trouble with paying my bills, but I would rather see my friends and neighbors stay in their homes than see wall street executive get million dollar bonuses from money we were told would be used to unfreeze the housing market.
Until we allow the
Until we allow the marketplace to take over and naturally correct this mess, our economy will not recover. How many govt. programs to help homeowners in distress does this one make? Can someone tell me if all the previous attempts have worked? They are costing us probably trillions by now, the only ones to profit as i see it are the banks as the rules are so combersome no one knoww what is what. We don't have any money left. We're about to loose our triple A bond rating. Will someone stand up and say not to this madness? You know what is coming next? We have so much debt a value added tax is next that's what. Think items you need now are expensive, wait until you have a value added tax.
Please----Live Within Your Means
Let me get this straight. I buy a house that I can AFFORD. Not a house that I can barely AFFORD. Not the house of my DREAMS. Not a house beyond what I can pay for if things do not go perfectly. A practical house. Now I will be paying for people who bought TOO MUCH HOUSE. Houses that they could NOT afford. My tax money going to pay for their upscale lifestyles while I live a more modest prudent lifestyle. We frugal taxpaying people will be paying for THEIR houses. And the Pilot is grousing because they will take a WELL DESERVED hit to their credit rating? What the heck is the world coming too?
Quit helping everyone.
Too many people bought houses they couldn't afford so the government is going to bail them out. If banks hadn't made bad loans they wouldn't have needed bailed out. Quit bailing everyone out. All we're doing is transferring corporate debt into government debt. Instead of putting money into the economy by leaving it in the consumers' pockets both our past and current administrations have given money to banks that paid their short term debt and raised interest on credit cards to make the money back to pay TARP loans. This has taken more money out of consumers pockets and made money for the banks. Bottom line, bail outs have strengthened the banks and weakened the consumer and the government.
So What...
You know, your credit score is I suppose the adult version of the "your permanent record" threat is to school children. If you're in danger of defaulting on your mortgage, your mortgage lender has already reported that to the credit bureau and your credit is already damaged as a result. With the new credit card rules going into effect, credit card companies already raised the interest rates on millions of people to increase their profits and unless you pay up, "it goes on your credit report."
So what if your score drops another 100 points-if that satisfies these jackals then so be it-I have done pretty okay even with a "poor" credit score and if I can't pay cash, I probably don't need it anyway. If there is an "emergency", I'll just have to find another way to cope than putting myself further into debt. I should think keeping your home would be more important.
It is to me, anyway.