No. It is a political bastard. Govt wants to pay existing servicers to modify loans without giving them any meaningful incentive to do so. The rewards are trivial. The element of payment not to exceed 31% of income is kinda familiar, however it is, as usual a political solution with no real practical way to implement.
Jumbo mortgages are excluded: anything over 650 ish thou is unrefinanaceable.
The plan talks about refinancing at some level of house value; that is the one variable that in not definable,and anyway what is the real incentive for a homeowner upside down in his mortgage to refi under these terms and be paying off a mortgage forever with no hope of getting anything back at the end.
This is a horrible political creation, a compromise.
My solution puts govt directly into the business of writing mortgages; with a real end result that works for govt, homeowners and taxpayers.
The only unintended consequence is that govt is now directly in competition with banks and mortgage lenders, the vast majority are effectively insolvent and bankrupt with no hope of ever lending anything meaningful because that will deplete their statutory capital and govt will put them out of business...because threre is no way for banks to lay off their mortgage bets because the securitization market is gone, because there is no way to value mortgage assets on bank books ... and round we go.
This will spiral out of control very soon.
Obama has no concept of the problem. He is playing politics with US citizens homes.
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