Upcoming Foreclosures

"Honk if I'm paying your mortgage" bumper sticker... I'm sorry am I missing something here?

I didn't believe the Homeowners Affordability and Stability Plan is to make my taxes pay my neighbor's mortgage payments. I thought my taxes were going to stabilize the housing industry by preventing foreclosures by readjusting mortgage amounts back to a socially acceptable 38% of a families income, or if that wasn't enough the government would pitch in 7% to bring it down to 31%, with the difference being made by extending the lease of the mortgage. For example, my neighbor had to foreclose his condo because he had applied for an ARM (which he now knows is unwise, he hadn't learned or god forbid been told by the lender what that meant) and got a $330,000 loan. He made his payments on time, $1600 a month for the first two years (they were interest only). Two years later, his interest rates readjusted to make his monthly mortgage payment $3200, while his property value had lost $100,000. He tried paying the $3200 a month, but considering it was just interest on the loan, and rents in the area are $1300, the whole thing was just a huge disillusionment. He tried to get the mortgage company to restructure, but they wouldn't. He stopped paying, and the company got $95,000 for the property through auction, losing $230,000 in the deal - $25,000 or so that had been repaid. This, extrapolated across the country, of course made everything extremely unstable, and is only now trying to be contained. For the above example, what I thought would have been extremely wise for Wilshire (the lender) was to take the homeowners documented income, (~5500 a month) make the mortgage 31-38% of that income, fix the interest rate, and extend the terms of the lease to be a 50-year mortgage. Homeowner stays in house, lender doesn't lose $230,000 and the financial system is better stabilized. I thought that was very close to Obama's plan, and so I see this bumper sticker by the Tennessee Republican Party and think it's irrational, inflammatory, and their head is in the ground. My question is, am I misinformed, are they misinformed, or are we both wrong? Thanks to everyone who read the entire post and considered the example.

Public Comments

1. The Republican party is floating around in half truths and inflammatory sayings. That's the only thing they're good for these days. That being said you are correct about your neighbor.
2. Consider this
3. Sometimes there's no good answer to a general problem. If too many of your neighbors lose their homes and those homes stay vacant for even a few months the value of ALL homes in that area will go down. Given the longer these homes stay vacant the more deteriorated they'll become lowering property values even more. While some folks, such as the person that posted this question have a point about paying for someone elses mortgage, but by not chipping in a little up front the lose of equity in ALL homes will be an even greater loser. There may be better ways to do it, but getting those WAYS written into law probably won't happen. When the #$%^ hits the fan we all get splattered. In this case, go with the flow. No kiddin'!