The government helped those who stopped making payments by giving the banks an incentive to cut the size of the mortgage and lower the payments to a ratio that would insure that payments would and could be made on time. The results are mixed.
Those who made their payments have little or no help. The amount you can be "underwater or upside down" is 5%, meaning that if you have $200,000 in one or more mortgages, your house must be worth $190,000. This should cover about 1% of those who are underwater and have made their payments on time. You also must have a Fannie Mae or Freddie Mac loan, generally a fixed rate loan, not larger than $417,000. Time to reduce the 1% to about 3/4%. If you are not quite underwater, but your mortgage is over 80% of the value of your house, then you can get help if you meet the criteria above. You will not have to pay mortgage insurance if you currently do not pay it, however if your first mortgage equals 95% of the value of your house or more, you must pay a one-point (1% of the loan) fee. If you have a second mortgage or HELOC, you cannot include it into the loan, but instead must subordinate it (put it behind the new mortgage). If your combined loan to value exceeds 90%, you must pay 1.5 points as a fee to subordinate.
So few people can be helped by this plan that it isn't worth discussing, but what is worth discussing is why does this all seem to be backward? Why are we sending a message that if you don't meet your responsibility you will be helped, but if you do you won't be helped? To be absolutely fair, you might be helped a little, maybe.
I will be happy to give you an answer when I stop shaking my head.
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