T.A.R.P. FINALLY comes to Main Street! About time!!!??!

Interesting developments in the TARP program and a wrinkle for agent across the country:

RE: Home Affordable Modification Program

The FHA will be offering U.S. banks that are holding mortgages that are underwater (25% or more of existing mortgages--CNN Money.com 2/23), 97.75% of present market value of those mortgage values. This will enable:

1. Banks to use the loss as a lesser "write down", than if the homeowners foreclosed.

2. Offer a lesser payment based on that new value, as a bonus to homeowners to keep their homes.

3. Many unemployed homeowners could receive three to six months of reduced mortgage payments while they look for a job.

4. Results in a more rapid recovery to end this never ending stream of forclosures and glut that we can never seem to get out of.

Keep in mind:

-assuming that the prospective homeowners do NOT have a 2nd lien, HELOC or wotherwise, than the current lender being bought out by FHA WILL RETAIN A SMALL 2nd lien against the property at a level NO MORE THAN 115% of current market value.

-banks have to be willing to participate. The current admisinistration is offering cash incentives at the corporate level to incentivize these banks to get on board.

-this program may not be off the ground until summer.

Here’s how that would work. Say you have a 30-year fixed mortgage with a balance of $250,000, an interest rate of 9 percent and monthly payments of $2,000 a month. Home prices have plunged, however, meaning the house is now worth only $180,000. Under HAMP, your lender will receive financial incentives to reduce the loan balance by roughly $33,000, cutting the monthly payment to $1,300.

There’s no such thing as a free lunch, of course. The government is funding the overhaul with $14 billion in taxpayer funds allocated to bail out banks under TARP. The efforts to plug HAMP also will dent bank earnings, since lenders (and their shareholders) are being asked to swallow larger losses.

My thoughts? Well, with 10-20 miliion foreclosures forecasted to occur within the next 3 years, something HAS to be done to stop this endless bloodshed.

After all, as the saying goes, if you want to live with the classes, you have to sell to the masses. With the middle class having less and less money in their pockets, and less jobs to count on, all agents should be adamant about pushing more programs like this.