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Old 02-20-2009, 07:48 AM
 
Location: Sacramento
13,755 posts, read 23,217,198 times
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One of the items I have read about in the proposal is a 31% payment target, meaning that the monthly payment should equal no more than 31% of monthly pay.

For those of you who understand the plan details, I have a couple of questions.

Does this apply to gross monthly income, from all sources? How would this be calculated for those who are self employed with fluctuating income and periods of unemployment (such as private contractors)? Also, does the 31% just apply to principle and interest monthly payments, or does it include property taxes and insurance too? If it includes insurance, does it have a factor to ensure payments are reasonable (can vary based upon coverage)?

Any factual insights would be greatly appreciated.
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Old 02-20-2009, 10:34 AM
 
Location: WA
5,293 posts, read 20,701,286 times
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The rules for the program have not been finalized. The examples used seem to include PITI but expect a set of guidelines that may not comprehend tax and insurance outliers.
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Old 02-20-2009, 11:26 AM
 
Location: Sacramento
13,755 posts, read 23,217,198 times
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Thanks for the response.

I was considering the difference in tax structure between states, and how this could add problems to the bail out process. For example, Texas typically has a property tax rate in the 2.5-3% range of home price, but no state income tax. California and Minnesota are the opposite, much greater reliance on state income taxes with lower property taxes. It would seem that inclusion of property tax would provide greater benefit to those in Texas than those in Minnesota or California, who would still be "burdened" with their high income tax rates.

Adding insurance, now my thinking is about the folks along the Atlantic coastline, and their very high insurance rates.

Just some ponderings...
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Old 02-20-2009, 02:28 PM
 
Location: WA
5,293 posts, read 20,701,286 times
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Quote:
Originally Posted by cdelena View Post
The rules for the program have not been finalized. The examples used seem to include PITI but expect a set of guidelines that may not comprehend tax and insurance outliers.
I was wrong. The sample cases distributed do not specify but working the numbers indicates that the debt-to-income ratio considerations are done with principal and interest only. Until the rules are out in another week or so we won't know for sure.
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Old 02-20-2009, 02:28 PM
 
1,613 posts, read 2,327,518 times
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Quote:
Originally Posted by NewToCA View Post
One of the items I have read about in the proposal is a 31% payment target, meaning that the monthly payment should equal no more than 31% of monthly pay.

For those of you who understand the plan details, I have a couple of questions.

Does this apply to gross monthly income, from all sources? How would this be calculated for those who are self employed with fluctuating income and periods of unemployment (such as private contractors)? Also, does the 31% just apply to principle and interest monthly payments, or does it include property taxes and insurance too? If it includes insurance, does it have a factor to ensure payments are reasonable (can vary based upon coverage)?

Any factual insights would be greatly appreciated.
From what I have read, the 31% includes taxes & insurance.

The information I have heard, but am not able to confirm yet is that for the modification portion, a homeowner has to be able to pay the 31% including taxes & insurance on an interest rate as low as 2%. If they can't meet the 31% level if the bank lowers the rate to 2% then they won't be able to qualify for a modification.
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Old 02-20-2009, 02:29 PM
 
1,613 posts, read 2,327,518 times
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Quote:
Originally Posted by cdelena View Post
I was wrong. The sample cases distributed do not specify but working the numbers indicates that the debt-to-income ratio considerations are done with principal and interest only. Until the rules are out in another week or so we won't know for sure.
Maybe i'm wrong - I thought I read that it included taxes & insurance. I'm going to have to go back through what I have read to make sure I am understand correctly.
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Old 02-20-2009, 03:39 PM
 
4,542 posts, read 11,544,610 times
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I wouldn't hold my breath hoping for a modification if you are above the 31%.
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Old 02-20-2009, 04:33 PM
 
Location: Sacramento
13,755 posts, read 23,217,198 times
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To get to the 31%, is lowering the amount owed an option, or just the interest rates on the current loan balance?
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Old 02-20-2009, 05:46 PM
 
Location: WA
5,293 posts, read 20,701,286 times
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Here are the examples... I still think we have to wait for the rules...

http://online.wsj.com/public/resourc...et20090219.pdf
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Old 02-21-2009, 02:39 PM
 
Location: Ocean County, NJ
228 posts, read 1,007,779 times
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Anyone think this will have an impact on mortgage rates in general?
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