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Raphael Cushnir Headshot

Obama-Math Doesn't Add Up for Most Homeowners

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First, President Obama said he was offering help to homeowners who were in financial straits but hadn't yet walked away from their homes or stopped making monthly payments. Then he said, today, that the time is now for refinancing.

So, I tried, and here's what happened.

I called my lender, Countrywide, and we went through the numbers. Even though my credit rating is stellar, I didn't qualify for one type of refinance with really good terms because my loan-to-value ratio, along with my income-to-loan ratio weren't satisfactory. That's because I'm self-employed, and the penalties for being self-employed are a whole other story.

The only loan option left for me, therefore, had the benefit of lowering my monthly payments about $300. But - and here's the kicker - it would require $6,000 in closing costs.

Let's be clear. Anyone who needs to save a few hundred bucks a month just to get by isn't going to have six grand sitting around to pay Countrywide (now Bank of America). Unless and until this offer changes, it's a bust for just about everyone who it's meant to benefit.

Why? I'm not quite sure, but there's are a few bread crumbs to follow. Most home loans are guaranteed by either Fanny Mae or Freddy Mac. These friendly sounding, government created behemoths, you'll recall, were at the heart of the mortgage meltdown from the beginning. Now, they're the ones dictating the terms of our Obama-created refinance opportunity.

If your "investor" is Fanny, as it turns out, good loan terms are available without huge sums due at closing. But if your investor is Freddy, you're currently out of luck.

This is huge news - the kind of ridiculous red tape that will sink hard-working families who are desperate for a leg up. Still, no one's talking it.

My Countrywide Customer Advisor agreed with me that refinancing under these terms would make no sense. She was in the same bind with her own home. The best she could offer me was a suggestion to call back in a couple weeks to see if public outrage caused Freddy to change its terms.

Here's hoping. Want to outrage with me?