Friday, October 31, 2008

The money PIT

The 'Lest we forget' post referenced all the ARMs that are coming up to reset soon, and that the housing crisis was nowhere near done. Well, apparently the government is planning to get in on the act and extend massive assistance to up to three million home owners... Quote: "... Under the program being discussed, the lender would agree to reduce borrowers’ monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowner’s ability to pay. These reconfigured loans could help homeowners avert foreclosure. To attract financial institutions to the program, the government would then guarantee to repay the lender for a portion of its loss if the borrower defaulted on the reconfigured loan ..."

Why doesn't the government help all homeowners by eliminating the "I" in "PITI?" PITI, also known as principal + interest + taxes + mortgage insurance, is the monthly payment that most folks pay (when taxes and mortgage insurance are escrowed in their monthly payment). Since the mortgage insurance doesn't exactly seem to be insuring anything - see yesterday's 'Repeat question' entry - perhaps it could be eliminated across the board, saving homeowners a few bucks?!?