It appears these modifications are possible for buyers who owe at least 75% of the value of their home, and who have missed 60 days of payments and who bought sometime in 2005-2007. And why not "miss" 60 days of payments? Look what you can win!
Terms mentioned include:
- All borrowers are encouraged to switch to an FHA loan, but why would they? because...
- Option-ARM borrowers may have the principal reset to 95% of the current market value of the house and have payments reduced to 3.5% rates.
- ARM borrowers may elect to keep the "teaser" rate for 10 years, or use an interest-only loan at 3.5%.
If sellers are paying 50% the payment that buyers are paying for the same house, then it will take approximately 15 years for inflation (at 4-5%) to make up the difference in pricing expectations.
Apparently Countrywide was servicing about 400,000 loans from this period, and they figure they'll pay about $8,750 per loan. ("Fixing" a 40% price decline for the same loans would cost them about $88,000 per loan instead.)
So their numbers sound really low to me, but I actually fill out rebate forms, so what do I know? Maybe they'll make the paperwork hard this time.