In February of 2012, the US government and 49 states agreed on a National Mortgage Settlement. So how does that affect you? Well, if you're a tax payer, one way or another...it affects you. But let's dig a little deeper.
Now I'm not a financial analyst, a legislator, etc. so I needed to do some digging to see how this settlement might be able to provide some desperately needed relief to folks in my family, my friends, and my clients. At first, after about 30 minutes of digging, I realized how hard it is to actually learn what the National Mortgage Settlement really is! Well, that's not entirely true, as I still don't know exactly what it is, where the funds go, and how!
It appears as though this state/federal agreement applies only if you borrowed from the big 5 lenders: Ally, Bank of America, Citi, Chase, and Wells Fargo. That only leaves about 150 or so other lenders that aren't included. But $25 Billion is a huge number, right? Sure, if you're talking personal income, but in terms of relief for the entire nation...we're not even scratching the proverbial surface. The best number I could find for total mortgage debt in the US is $14 Trillion. (the image below was copied from the Federal Reserve site)
So that means that if all $25 Billion went immediately to the borrowers who are underwater...we'd owe $13,341,278,000,000. That's a 1.7 percent break! Forgive my sarcasm, but WOOOO HOOO!!! Finally I can sleep better, knowing we'll all be OK!
Then I read that the settlement sets aside $3 Billion to go toward refinancing relief for borrowers that are current but upside-down on their mortgages. Let's break out the abacus again. Approximately 30% of all mortgages in the US are "Upside down". Call that $4 Trillion for simple math. So the $3 Billion going to those who continue to pay on time is less than .1% relief. Don't miss the little point before the one: one tenth of 1 percent! I mean, if you're passing out billions, I'll be the first in line, but that's not what's actually going to happen on September 24th, 2012. when this thing gets rolling.
Click here to read more from the California Department of Justice. It starts to explain how, when, and where the funds are going.
Then click here to learn that...of the 49 states participating, many are setting aside funds for their general funds. For example, California setting aside nearly a half a Billion dollars to pay toward the state's debt.
Now I could be mistaken. It has happened before! But this smells an awful lot like a 25 Billion dollar media stunt.
On a very serious note, if you've been foreclosed on; if you're buried in your mortgage, please look into this program anyway. It is real money. Although it's not going to change the world, it could change yours. Maybe you'll be one of the lucky few.
As I personally struggle having much faith in our government, I'll leave you with this little taste of wisdom:
" What you do speaks so loudly that I cannot hear what you are saying"
~ Henry Adams
Until next time, and thank you in advance for remembering me when the topic of real estate arises.
Email me at andy.blasquez@gmail.com
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Finally, please comment or ask questions. Other readers may be wondering the same thing. I love the feedback, critical or otherwise, and love the interaction: I love this job.
Click here to reach Macky Hensel.
Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook
Finally, please comment or ask questions. Other readers may be wondering the same thing. I love the feedback, critical or otherwise, and love the interaction: I love this job.
Thank you always for your support.
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