This week we got more details about the Obama program for upside homeowners, and here’s why the Obama loan is bad news. He says as long as you have at least a 580 credit score, and haven’t missed any payments in the last 6 months you qualify for a loan. Now they do say you must have a job but there’s no income requirements or verification. So that anyone regardless of income level can qualify for a lower interest rate in California regardless of if they can truly afford to live in their house.
Doesn’t he remember how the banks got into this mess in the first place? While he says he wants these loans guaranteed by the Federal Housing Administration, the Obama refinance program will be allowing borrowers who have privately held mortgages who stand to default, the opportunity to stay in their homes and refinance into low interest rates on a “government backed” FHA loan. This way, we the taxpayers will take all the risk for them, so when they default, we can all reach into our pockets and pay for it rather than the big banks. One more thing his advisors forgot to tell him, while FHA interest rates are low, if you’re not paying mortgage insurance now, you will be under the new Obama loan, so when you add in the Upfront Mortgage Insurance and monthly mortgage insurance, the savings ends up being nowhere near the $3000 he’s figuring.