http://www.businessinsider.com/should-taxpayers-subsidize-underwater-homeowners-2010-3 Who is eligible? Under one program, called HAMP, the Home Affordable Modification Program, you are eligible if you: … live in an owner occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and... [more]
http://www.businessinsider.com/should-taxpayers-subsidize-underwater-homeowners-2010-3
Who is eligible? Under one program, called HAMP, the Home Affordable Modification Program, you are eligible if you:
… live in an owner occupied principal residence, have a mortgage balance less than $729,750, owe monthly mortgage payments that are not affordable (greater than 31 percent of their income) and demonstrate a financial hardship. The new flexibilities for the modification initiative announced today continue to target this group of homeowners.
Excuse me? We’re going to subsidize someone with a mortgage balance of $700,000?!
(Updated: A knowledgeable reader thinks my 5.25% interest rate was unreasonably low, so I’m changing the example to assume a 7% rate.)
Let’s do a quick back-of-the-envelope calculation. Suppose you have a mortgage balance of $700K, with 28 years left on your 30-year mortgage at a fixed 7% 5.25% . Your monthly mortgage payments would be almost $4,800. If that’s greater than 31% of your income, you make less than $186,000 per year.
Does it really make sense for the Administration to use taxpayer funds to subsidize someone making less than $186,000 per year to stay in a home with a $700,000 mortgage balance?!
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