Obama Details Rescue Plan for Homeowners
With almost one in ten houses either delinquent or in foreclosure, President Obama unveiled a more ambitious plan than expected yesterday that could end up helping as many as nine million Americans. The $75 billion portion of the plan directed at homeowners has two basic goals: 1) To help the roughly five million homeowners who…
With almost one in ten houses either delinquent or in foreclosure, President Obama unveiled a more ambitious plan than expected yesterday that could end up helping as many as nine million Americans. The $75 billion portion of the plan directed at homeowners has two basic goals: 1) To help the roughly five million homeowners who are current on payments but facing high interest rates and unable to refinance because the value of their homes has deteriorated; 2) To incentivize lenders to modify the mortgages of roughly four million homeowners on the verge of losing their homes. In addition, the Obama administration will pump another $200 billion into Fannie Mae and Freddie to increase the general availability of mortgages. The plan also aims to lower consumers’ debt-to-equity ratios overall. This plan will not save every home, but it will give millions of families resigned to financial ruin a chance to rebuild, Mr. Obama told a crowd here, in one of the communities hardest hit by the housing crisis. It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone. As The Times reminds us, modifying mortgages doesn’t always work.
$275 Billion Plan Seeks to Address Crisis in Housing [NY Times]
O’s $75 Billion Housing Bet [NY Post]
President Obama Unveils $75 Billion Plan [NY Daily News]
“If you can’t afford your home go rent!”
It’s cheaper and you’ll (not you personally, hannible) be happier. Your credit is already ruined. It’ll take seven to ten years to reset your credit but that’s at least how long we’ll be in this depression and how long it’ll take for you to save 20% down + 6 months of reserves.
Again, this is a rescue package for banks. As futile as it is.
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Schadenfreude
VIVA Rick Santelli from CNBC! I say we make hime a saint. I am planning a bus trip to Chicago in July when he is having the Chicago Tea Party. Great of him to call homeowners losers. If you can’t afford your home go rent!. If you are a renter don’t buy yet let the home prices fall even more. Renters it is our defining moment!
BTW, $75B does jack.
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” ‘keeping people in their homes’ is only a marketing slogan. What the govt cares about is a mass ditching of obligations under contracts, and they’re trying to stop the spiral that would cause that.” – joe_the_bummer at February 19, 2009 12:28 PM
Allow me, What.
Ding ding ding!!! We have a winner!!!
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Folks;
Just read the Interntaional Herald Tribune with my morning coffee. I came upon this column, which really hits the nail on the head:
http://www.iht.com/articles/2009/02/19/business/col20.php
I agree with Mr. Snark (FYI snarky, i was with 1 1/2 other SOTDers today!- we missed you!). It was well said, benso and I can’t disagree with your point about propping up what was wrong in the first place. But On the other hand, I think the stimulus can also be thought of as fixing the leg of a broken chair until you can get a new one.
In some ways we don’t have a choice because the people who will get hurt the most are the ones who can least afford it. It isn’t just the economy that needs fixing- its our whole way of thinking.
Well said, Benson.
Hi folks;
I’m back (I’m actually in Tokyo, so it’s morning time here). I’d like to make a few more comments:
-North Slope Renter and ENY: I stand corrected on my previous comment about who is helped with this plan. As you pointed out, it does seem to also help those who are underwater, by providing an option for refinancing.
-I continue to maintain that this plan is a very bad idea. I am well aware that folks are hurting out there in this economic situation. I can understand the political desire to do something to help ordinary folks who have been hurt by this economic tsunami. I think that some of this relief was provided in the recent stimulus package: tax cuts, giving unemployed folks the options to sign up for medicare, extending unemployment benefits, etc. Perhpas more needs to be done. This bill,however, is a bad idea because it is trying to prop up an unhealthy economic situation, namely, housing prices are still not in conformance with income levels. In order for the housing market to revive, it is necessary for pricing to settle to its natural level at which the local income levels can support it. By trying to prop up pricing, you are just prolonging this process and the pain that goes with it. Moreover, it is unjust to those folks (perhaps like Joe the Bummer) who are waiting to buy his place. Because of this bill, he will have to either forestall a purchase, or pay a higher price. How is that fair to these folks? This bill disincentivizes the whole point of thrift.
As Ringo put it so well a few days ago: help folks get back on their feet, but please don’t artificially prop up the remains of a housing bubble.