Some have asked what I think about the Seventy Five Billion Dollar homeowner affordability and stability plan.

I think it sounds great, but so far all I am hearing is broad overviews and not the hard facts on how to qualify for the assistance. I may be a candidate for this and I would welcome any reduction of my mortgage payment. I am owner occupied, 4 units or less, current on payments, ARM reset on the horizon indicating I may have a future problem making payments. Did I mention that as a Realtor my income has decreased? Now for being responsible, I will get my payments lowered to 31% of my income! I knew doing the right thing would pay off some day! Lets see how this is going to work.

The U.S. Census Bureau reports there are 51,000,000 owner occupied homes with a mortgage for the accounting period of 2005 - 2007. According to RealtyTrac there were 3,100,000 foreclosures in 2008. That would leave about 48,000,000 existing owner occupied mortgages still on the books. In addition to principal reductions and lower interest rates “the plan” calls for an annual incentive of a $1,000 principal reduction for borrowers who stay current for the first five years. So just the incentives will be $5,000 per household.

Now try to calculate the “workout”, which has not been disclosed how it will actually work. Lets be very conservative and estimate $25,000 per household and again be very conservative and figure $5,000 per household for appraisals, closing costs, administrative and general bureaucracy. Grand total per household being assisted $35,000. I am thinking real numbers will be in the $50 - $75K range.

Last year the Mortgage Bankers Association stated that 1 in 10 borrowers were in trouble. 75 Billion divided by 4.8 Million (1 out of 10 households) = $15,625 per applicant. I don’t think that is enough.

To go conservatively is closer to one in 20 mortgaged households; realistically it will probably be closer to one in 50 mortgaged households (960,000) if there is to be any real relief at all ($78,125). Remember, one in ten are in trouble.


As an example, the city of Minnetonka, MN has a population of about 50,000. Total owner occupied units of around 16,582 and 12,317 reporting they have a mortgage. As there is only so much to go around, that could mean potentially helping 246 households in a city the size of Minnetonka, MN where 1,232 need help.

Looks like it really is time for HOPE and CHANGE.
I HOPE that I am the only homeowner in my city that applies for the affordability and stability plan.
I HOPE I am one of the chosen few who receive 10’s of thousands from the Fed.
I HOPE the rest of you 138 Million taxpayers cough up $544 dollars a piece to fund this program. Better yet, just send in $600 and tell the man he can keep the CHANGE!
Disclaimer; I have been wrong before. -JR