President Barack Obama’s mortgage bailout plan is predicated on the idea that by forcing lenders to rework some mortgages, there will be less foreclosures and housing prices will not keep falling. Problem is, as soon as you start setting standards to determine which mortgagees qualify, many homeowners won’t qualify for the federal aid … especially in the areas hardest hit by the housing bubble. So the San Francisco Chronicle reports:
More than 90 percent of Bay Area mortgage holders cannot qualify for the low-cost refinances included in President Obama’s housing rescue package, according to an analysis of loan data from real estate service Zillow.com.
“The Bay Area is being hit by the fact that it’s high-priced, and therefore the loans that were made around the peak years were not conforming (meaning they were above $417,000), and secondly, that (the housing market) has gone into such sharp decline that many homes are underwater by more than 5 percent,” said Stan Humphries, vice president of data and analytics for Zillow in Seattle.
With 90% of mortgage holders not qualifying for help, Obama’s mortgage bailout plan has no prayer of working in the Bay Area. And the situation is not much better in the other mortgage hot spots throughout the country. Overall, only 26% of mortgage holders nation wide would qualify for the program according to Zillow. Other housing bubble epicenters like Florida, Las Vegas, and Phoenix also have seen housing values drop too far for homeowners to qualify for Obama’s program. With so few qualifying for help, this plan has no hope of working.