Why stretch out a $1.05 to ten years, when you can refinance to $1.25 and stretch payments out to twenty years? This is what the Home Affordable Refinance Program really looks like if you do the numbers.
$1.05 / 10 = .105 per year
$1.25 / 20 = .0625 per year
Homeowners are basically taking on more debt to finance existing debt. Instead of paying off everything in ten years, they are chained to the paying off the mortgage for a total of twenty years at a lower payment, but really at a hefty increase at present day value (the above example, the borrower took on another nineteen percent debt to put themselves deeper in the hole).
While failed corporations get bailout money, fail home owners get to owe more money.
