FDIC+ Mortages

Excerpt from: http://www.thestreet.com/story/10448026/1/stocks-fall-as-investors-rush-to-lock-in-gains.html

"The FDIC released details of a plan to use $24.4 billion to guarantee 2.2 million mortgages, thereby helping some 1.5 million Americans stay in their homes."

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WTF?

A LOT of people are going to just look at this and say "oh how kind of them, they'll save all those people". But let's take a look at the Maths here...

How much does the FDIC think a house costs in America? Well, perhaps we are dealing with subprime. Or really small mortages. But seriously, 24.4billion divided by 2.2 million = USD20,000 per house.
Are they sure about that? ... And... my rough estimate is... let's see... assuming 20k mortage at 7% for 15 years... USD180 per month. You're telling me that the people living in those homes cannot afford to pay this? ... these are VERY sub-prime quality loans then. In fact these are so toxic, you might die from glancing at the balance sheet. It means that you are basically guaranteeing the mortages of people who don't have a real job. In reality, these folks are probably better off just declaring bankruptcy and freeing themselves from these debts, then starting over with a clean slate. Seriously, you should NEVER underestimate the power of starting out all over again when your life is in a mess. It can be a MUCH less painful choice than a long, painful and possibly ultimately failed uphill battle to turn your life around with large debts in your path. The bankruptcy laws are not to just to protect lenders... they're there to help the BORROWERS. Check your nearest government body for a free consultation. (if your government provides one. In malaysia it is http://www.akpk.org.my/)


Secondly. Er. Did anyone else notice? 2.2 million homes... 1.5 million Americans?
YEAH, there's a gap of 0.7million there... around 1/3 of those homes do not fall into this category?
No wait... in fact many of those homes will in fact have 2 or more Americans living in them. Families, as you know, would have more than 1 person living in a home.
So... dum de dum dum de dum estimate guesstimate.... They want to guarantee 2.2million homes. 1.2 million of which are not occupied by Americans?
So are they occupied by foreigners, or are those homes unoccupied, ie some fellas were just buying homes for INVESTMENT purposes and never intended to live there... it was a just a punt/ gamble on property going up?

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Something not looking quite right here. I have no idea what is going on, but I do smell something fishy.

hmm... will do more research and update blog later.


Summary: this mortage guarantee sounds like a nice idea, but the numbers are looking weird! Something is wrong somewhere...