Can someone answer my question about the mortgage bailout plan?

[county worker]

I don't know what the real name of the plan is but I heard on cable news that it is to help those who owe more on their homes than they are worth and the owner can't make the payments due to having an ARM. In other words the house is losing value and the mortgage payments are increasing in amount. The owner can't pay the higher amount and is going to get foreclosed on, or they don't want to make the higher payments and will get foreclosed on.

It involves refinancing the mortgage at a lower rate.

If I understand this correctly the new mortgage will be at the lower value. The payments will be lower because of a lower interest rate and a lower principal balance thus a lower cost mortgage.

Assuming the above is correct, what happens when the house value starts increasing again. The owner will then begin to get equity that he/she otherwise would not have gotten. So they eventually sell the house and get the equity in cash. So if that is true didn't the tax payer get taken for a ride?

[TNOE]

1. We've already been taken on the ride

with 9/11, the Iraq & Afghanistan Occupations, the emptying of our Treasury to Bush's pals in the oil industry, weapons industry, security industry, the banking and securities industries, etc., the Tarp.

Now we've got Obama trying to safely slow the train down. We have no choice but to roll with it now.

[marketcrazy1]

2. as i understand it this is not correct,

apparently re fi`s that involve reduced principal will lead to a sharing of future appreciation by the government and or banks who have reduced the loans principal so that this reduction can be re captured should home values rise in the future.

[snappyturtle]

3. That's the way I understand it too. It's the re-capturing that bothers me. nt

[county worker]

4. You can only recapture the appreciation when the house is sold.

Or the owner dies and the house goes to the lender or government.