The government released its foreclosure prevention plan today, making it possible for people to refinance their mortgages so they can stay in their houses. The plan aims to make payments low enough so people who are stretched thin can keep paying.
Sounds like a good idea. I think it is. But then I saw how much a person could still have to pay after their mortgage is adjusted.
It's up to 31 percent of their gross income. That's before-taxes income. After taxes it could approach or exceed half what a person makes. And that's supposed to make their financial situations better?
I can't imagine paying that much. My wife and I recently purchased a home and we worry about paying a percentage of our income that is far, far below that amount. We were called "ultra-conservative" during the process - which I took as a compliment - and with the economy being what it is, I still worry about paying as much as we did.
And we'd probably drown, let alone ever be able to go to a movie or a restaurant or otherwise help the rest of the economy by spending, if we had to pay 31 percent.
What do you think? Does this plan have the teeth to actually help, or does it still leave room for too many people to be "under water?"
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