Relief for some but is it fair?

<p>After moving to Santa Rosa two years ago to be near her four grandchildren, Lynn Garland was swept up in the tsunami that took out the housing market and says without help she may be headed for bankruptcy.</p><p>Like millions of Americans, the 69-year-old divorcee is waiting anxiously for President Barack Obama’s housing rescue plan to take effect Wednesday. These homeowners pray the plan will allow them to refinance their homes and reduce their monthly payments or even forestall foreclosure.</p><p>“It would be such an incredible relief,” Garland said. “I would be able to buy Christmas presents for my kids. At this point, I’m down to the bone.”</p><p>Obama’s controversial plan is viewed by some as a prudent, if imperfect, way to place a floor beneath distressed housing markets where short sales and foreclosures are a drag on entire neighborhoods.</p><p>Others argue the plan merely rewards people who got in over their heads, and that in principle, it’s unfair to allow some but not all homeowners to seek better financing deals.</p><p>Garland’s situation epitomizes these different arguments.</p><p>A former University of California administrator, Garland moved out of her condominium in Carlsbad in 2007 and into a $250,000 home in Santa Rosa’s Burbank Gardens neighborhood. But after determining the home was too small for her to operate an acupuncture studio, Garland said she put it on the market in 2008, just as Sonoma County’s housing market was in free-fall.</p><p>Garland was unable to sell the home before closing on the house where she currently lives in the Santa Rosa Junior College area. She said she cashed an annuity to pay down the loan on the Burbank Gardens home so that she could rent it. In addition to that mortgage, she pays $1,620 monthly to make interest payments on a mortgage for the King Street home. She also rents the Carlsbad condo, which is paid for.</p><p>Garland said her acupuncture business is struggling and that her only other income is from Social Security and a modest pension from the University of California.</p><p>She is awaiting a response from Wachovia, which was bought by Wells Fargo, regarding her request to refinance her residence, the King Street home, while anticipating the details of Obama’s plan to see whether she can find financial relief.</p><p>Some would argue Garland extended herself and therefore does not deserve the help. But Garland said she never intended to keep the Burbank Gardens home and that her condo is her only remaining nest egg. In addition to cashing out her annuity, she’s maxed out one credit card and is close to filling another.</p><p>“I have never asked for a handout and that’s not what I’m asking for now,” she said. “I’m just asking for a mortgage that I can afford to pay.”</p><p>What is known of Obama’s plan does not bode well for the vast majority of Sonoma County homeowners.</p><p>Under the plan, homeowners cannot owe more than 5 percent of what their homes are worth. Many Sonoma County borrowers bought near the 2005 market peak and are too far under water to qualify. The median price has been cut in half over the past 3 1/2 years, hitting $315,000 in January.</p><p>Garland isn’t under water. She said she owes $260,000 on the King Street home, which she said was appraised at $276,000 three months ago.</p><p>That would appear to meet one key condition of Obama’s plan, which is limited to loans held or guaranteed by Fannie Mae or Freddie Mac. Garland’s monthly mortgage payment also has to be greater than 31 percent of her monthly gross income.</p><p>Kris Anderson, a mortgage broker for Allstate Mortgage Co. in Santa Rosa, said lenders are eager for Wednesday’s unveiling to know how to advise their clients.</p><p>“Are they going to allow mortgage brokers to help these people, or do you have to work with your current lender?” Anderson said. “Why would Bank of America want to refinance someone who’s underwater at Wells Fargo?”</p><p>She said it’s also unclear whether homeowners will have to purchase mortgage insurance in order to refinance or how much documentation they’ll have to provide before being considered for a new loan.</p><p>John Gianfermi, a stainless steel fabricator who lives in Santa Rosa’s Coffey Park neighborhood, represents many Americans who are ambivalent or even angry about people who will receive housing assistance.</p><p>Gianfermi said he and his wife worked hard and lived within their means to buy and afford their home, and that they now owe $150,000 on it. The home’s estimated value is $380,000.</p><p>Gianfermi, who could seek refinancing at any time, said part of him welcomes the relief for others.</p><p>“If someone is hungry, do you give them food or let them starve? I’d want to give them food,” he said.</p><p>But a part of him also believes that Obama’s plan is unfair. He said he’d prefer that all homeowners be given the opportunity to refinance.</p><p>“You try to do what’s best, but as long as you do, nobody cares to help you,” he said. “I feel like my wife and I are the middle class that bears the brunt of everybody above us, and everybody below us, and we’re shrinking down to nothing.”</p>