So, who qualifies within that range?

The bailout is really designed for homeowners who could run into trouble if their mortgage payments will soon rise sharply and who are likely to lose their homes to foreclosure. 

If you are able to pay after the reset:

If you are financially able to afford higher mortgage payments after the reset, you do not qualify.  No free ride!

If you are already in trouble at the current rate:

If you can't make your payments now at the current low interest rate, you do not qualify.  For example, if you've already fallen behind on your mortgage payments, you're not eligible for the rate freeze.

Do you need to live in your home to qualify?

Yes.  Investors who used these mortgages, but do not live in the homes they bought, do not qualify.  Investors, too bad!

Why do we need this bailout?

President Bush, Treasury Secretary Paulson, and the rest of the administration are concerned about the fallout from the housing slump.  There are considerable economic consequences to not solving the problems of people who fall behind on their mortgages and have to give up their houses.  Some of these are: 

• The affected mortgages account for $300 billion dollars of the three trillion dollar US mortgage market.
• Tens of thousands or even hundreds of thousands of American voters would be forced into foreclosure. (Wouldn't want to be an incumbent politician when that sinks in).
• Our economy, which has been buoyed by consumer spending, will undoubtedly slow still further. Smells like recession.
• Home prices could fall significantly and new home construction would slow further.
• Consumer confidence would be rattled still more, and
• (cynically), many politicians and career bureaucrats, would find themselves unemployed.

Is the bailout "The Answer"?

Probably NOT.  The plan will help stabilize the housing market, but it won't reverse the problems that housing faces overnight.  Today, the Mortgage Bankers Association reported that foreclosures reached a record high in the third quarter.  The share of mortgages that have entered foreclosure hit 0.78% in the quarter, up from the previous high of 0.65% set in the previous quarter.  Delinquencies for all mortgages rose to 5.59%, from 5.12%, in the second quarter.  No one who is delinquent now or facing foreclosure will be helped by the plan.

While we are fortunate in Atlanta that our home prices rose 1.6% in the last year  , nine of the top ten housing markets expect housing prices to decline by double digits in the next year.

Too Little, Too Late?

Some Democrats are proposing more far reaching bailouts.  For example, Sen. Hillary Clinton, D.-N.Y. and others called for an even more vigorous bailout with a seven-year freeze on interest rates.

What's Not To Like About The Bailout  - Moral Hazard?

Investors in mortgages and mortgage-backed securities bought these mortgages as  investments.

If homeowners pay less on their mortgages or pay later than originally planned, these investors lose money.

These mortgage-backed securities, sold on Wall Street, are part of the mutual funds and pension funds that people rely upon for their future security.

Some argue that by bailing out these "speculators", we encourage people to take risks - like buying more house than they can afford, inflating their incomes for loan applications, etc. 

There are many groups who advocate doing nothing to help the affected homeowners. They say that people who sign contracts should have to live up to them and take the consequences. 

Net - Net

If you are in mortgage trouble now or expect to be soon, don't wait on this plan. 

Seek help.  Take action now!