| With foreclosures up nearly 100% since last year, the state of the mortgage crisis is now being dubbed as "Mortgage Meltdown 2007" by media outlets like CNN.com and MSNBC.com. The unprecedented decline in the United States housing market is shaking lenders, home owners, and financial institutions to the very core. With all these uncertainties driving the U.S. economy into recession, many are looking to subprime bailouts for relief. New bailout plans, or foreclosure prevention packages, have been recently announced by Countrywide Financial. Countrywide said it will refinance, restructure loans, or reduce interest for hybrid ARM borrowers whose rates are scheduled to reset. Countrywide also announced it will rework loans, prime and subprime alike, for any troubled borrower, adjusting payments to reflect what individuals can afford. The company will administer the program with non-profit community advocate, the Neighborhood Assistance Corporation of America (NACA). Some troubled borrowers will escape with refinanced loans as low as 5.25 percent. However, not everyone is happy about these foreclosure prevention packages. Many people are expressing outrage saying that tax dollars shouldn't be spent to bailout irresponsible and delinquent borrowers. Teresa Nelson, who pays 7.10 % on a fixed 30 year mortgage, expressed her concern on CNN's message boards saying, "I was well aware of what an ARM meant, and was staying far away from those snake-oil pipe-dream promises. Everybody was seeing dollar signs and let their greed get the better of them. So, no. No bail-out, no assistance with my tax dollars. Not one red cent." And it's no wonder Teresa Nelson and others feel cheated by the bailouts; some troubled borrowers will escape with refinanced loans as low as 5.25 percent. Some lenders are even restructuring loans for delinquent borrowers, who now will pay at the initial low teaser rates for an extra five years for huge savings. That's great for them, but many responsible borrowers, like Nelson, feel cheated. Countrywide's CEO of loan administration Steve Bailey doesn't agree. Bailey says he understands their anger but, "That's a situation where the greater sin is letting their homes go into foreclosure. You have a vacant home in the community and drive down the property values of neighbors." In an effort to stabilize the industry, the subprime bailouts are looking to stem the spread of foreclosures in order to prevent vacant neighborhoods and the lowering property values; not screw over responsible home owners. Some stipulations will apply to the bailouts. |
