The Obama administration yesterday unveiled details of a $75 billion program to help borrowers avoid foreclosure, but some analysts say it will have little benefit for San Diego County and other U.S. communities that have been hit hardest by the mortgage-market meltdown.
The plan is designed to help households at risk of foreclosure to refinance or modify their loans to make mortgage payments more affordable. But in markets where prices have fallen sharply, tens of thousands of distressed homeowners won't qualify because their home values have fallen too far.
The foreclosure-prevention strategy “will benefit the people who probably need it the least,” said Dave McDonald, president of the San Diego County chapter of the California Association of Mortgage Brokers. “I don't think it will have much effect here. In other states, it will.”
One part of Obama's program offers refinancing to those who owe more than 80 percent of the value of their homes. Refinancing will be limited to loans guaranteed by government-controlled mortgage giants Freddie Mac and Fannie Mae, however. And homeowners are ineligible if their first mortgage exceeds 105 percent of their home's current market value.
A big share of San Diego County's housing stock falls into that category.
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SOURCE: San Diego Union-Tribune
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