What's up with W's so-called "mortgage bailout?"Let's see if we have this straight. Bush has gotten mortgage servicers to agree that if you're NOT BEHIND on your mortgage payments, THEN you can have your interest rate frozen.
Who the heck does that help? According to today's Washington Post, 19.6% of subprime borrowers have past due payments on their loans right now. They're the ones in trouble.
But Bush's plan does nothing for them.
If you're not behind, however--meaning you've made it this far into a crisis that has extended well over a year now, without falling behind--then you may get a nice little windfall.
The plan also does nothing for subprime borrowers who took out loans before 2005. We don't understand that distinction at all.
At bottom, all Bush has negotiated is what the most lenders would agree to anyway in terms of a workout of an at-risk loan. Lenders don't particularly like foreclosures--they're expensive, especially in this market. So, Bush "plan" or not, if you have been making your payments, have some equity and your credit score hasn't deteriorated, you can get your lender to modify the terms of the loan; or you can refinance to a fixed rate.
This particular plan, however, is just more "Bushit."
We predict that when most borrowers find out the bailout doesn't help them, they'll become even more angry at Bush and the Republican party (which is also hearing from the other side--those who think people who made bad decisions shouldn't be bailed out).
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