So much for Obama’s new housing refinance plan

mike whitney writing in counterpunch via information clearing house...

The truth is the banks want to offload their garbage mortgages onto Uncle Sam to avoid hundreds of billions of dollars in losses. That’s what this refi-ruse is really all about.

The administration estimates that 3.5 million people with private label mortgages will be eligible to refinance into loans backed by the Federal Housing Administration (FHA) Many of these are high risk mortgages that will eventually go into foreclosure which is why the banks want to get them off their books. Regrettably, Obama is only too happy to help them achieve that goal.

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To be eligible for Obama’s refi-program, borrowers will need a credit score (FICO) above 580,(which is extremely low), they’ll have to be employed, and they’ll have to be current on their mortgage payments. (for the last 6 months) In other words, lending standards are being eased so the banks can dump as many high-risk mortgages on the FHA as possible. Obama breezily refers to these abysmal lending standards as “cutting through the red tape.”

Applicants will also be able to refinance under the Obama’s program with loan balances up to (get this) 140 percent of the value of their home. So, even if you owe $560,000 on a home that is currently worth $400,000–and you don’t have a dime’s worth of equity in the house–have no fear–you can still get money from Uncle Sugar. This isn’t a good way to keep people in their homes. It just turns them into debt slaves.

well, we figured out some time back that obama is owned by the banks, lock, stock and barrel, so none of this should come as a big surprise...

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