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The Spectacle Blog
A new home lending “revamp” has been announced by the Obama administration, but it already looks like it’s going to be a disaster. How would it work? Just ask an upper middle class family about all the cool things they could do with the money they’d save on a refinanced mortgage!
The revamp is aimed at homeowners like Christine and Hector Penunuri of Gilbert, Ariz., who have never missed a mortgage payment and who both have jobs and good credit. Yet their application to refinance their five-bedroom home, which has fallen in value, was denied earlier this year because their tax returns showed a $1,000 loss in start-up costs from Mr. Penunuri’s business, which isn’t even his day job.
It’s “absurd,” says their mortgage broker, Steve Walsh of Scottsdale, because the loan is already guaranteed by government-backed mortgage company Freddie Mac.
The Penunuris could save $350 a month by refinancing to a 4% rate from their current 5.75%. They would use that money to put their two sons into junior sports, take a family vacation and pay off other debts, says Ms. Penunuri, 41 years old. “It’s a win-win situation.”
Junior sports. A family vacation. And maybe pay off other debts.
It’s a win-win situation if you’re not one of the taxpayers struggling to make ends meet and underwriting someone else’s vacation.
View all comments (8) | Leave a comment
More Blog Posts by J.P. Freire
http://spectator.org/blog/2011/10/24/your-tax-dollars-are-bailing-o
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ncatty| 10.24.11 @ 10:20AM
You sound like you should be occupying Wall Street.
JohnD| 10.24.11 @ 10:32AM
As an Upper Middle class homeowner who's mortgage is under water, I like the idea of J.P. and other taxpayers financing my vaction.
Kingofthenet| 10.24.11 @ 11:29AM
Why is this going to cost anyone any money? Refinancing has fees involved, it's a BASIC part of finance, if you qualify for a 6% loan and can make the payments, why wouldn't you qualify for a loan that will reduce your burden, it's absurd.
Dai Alanye | 10.24.11 @ 1:10PM
For some reason the sad difficulties of the Penunuris fails to bring even one tear to my eye. Let them wait until conditions improve or find a different lender, just as the rest of us must do in similar situations. After all, I've suffered because there's no nearby gourmet grocer, but haven't demanded the government fix the problem. Worse yet, my community has no swimming pool! When is Obama to act on this tradgedy?
To hell with them and their vacations, and to hell with all other sissy-folk who want big brother to salve their minor hurts.
rendite| 10.24.11 @ 1:28PM
Serious question on this theme/issue:
Doesn't this "bail out" (after all, it appears to require legislation or new regulation -- if it were all legit and logical, why would it require legislation or new regulations?) just serve to further one of the big problems in America? That problem is overpriced housing, whether appartments or free-standing housing. Property costs.
Everybody knows and sees that house prices and propety prices are still outrageous.
A real benefit of seeing people "suffer" who bought (and took loans) far more house than they could afford is that we'd continue to see house prices drop. A truly needed correction.
However, now, with this new edict/regulation in place, won't we see the correction for housing prices slow or stop altogether? Perhaps?
So this is still a lose situation for the young family or first-time home buyer who is losing patience on the sidelines waiting for housing costs to drop to what is actually affordable.
Those in the know: Please comment on what I write above. I am most interested to hear what far more knowledgeable folk have to say on this.
Also: It sounds like the Penunuri family of Gilbert, Arizona might indeed save money and thus get some relief for their family 'strapped' budget. But: They seem prepared to blow any new gain they might have thru this and push toward more overall family credit card debt on vacations .
I guess Americans tend to be very poor financial managers and financial planners?
David W| 10.24.11 @ 2:26PM
When I was laid off in 2009, I looked at refinancing. Even though I was unemployed, my balance was too small for the mortgate company to be bothered.
When will we be convinced that the governement needs to quit taking care of everyone? If the people who can afford to refinance do refinance, what will happen to those who are on the edge? Will there be any money left for them to refinance? Will we never learn?
Mike 3/505| 10.24.11 @ 5:13PM
Why is it a good business decision to refinance a loan to a lower rate for a customer who is "steady Eddy" on his payments? That was a question, not a shot.
Regards,
Mike