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 $75 Billion Plan [NY Daily News]
“This bailout is aimed at folks who cannot afford their payments and are in danger of foreclosure, NOT for folks who are meeting their payments, but are underwater (homes worth less than the mortgage).”
Actually, that does seem to be what’s happening here, Benson:
http://www.nydailynews.com/news/politics/2009/02/18/2009-02-18_queens_homeowner_pleads_i_need_your_help.html
bxgirl, I guess I am just a total wuss. I always figured two years of cushion was a bare minimum. that’s why I rent. I never knew I was such an outlier. arg. I would have bought in 2000 if I wasn’t such a f#$@g p$#@ssy.
petunia, I think the fed is effectively going to set the rates. a mortgage broker won’t be able to predict this any better than you can. see my 10:13. you still won’t be able to re-finance if you don’t qualify for the plan and you’re under water, unless you give the bank more cash.
I am also interested in Lambretta’s question: how will this affect current interest rates for refinancings in general? There had been a lot of previous talk about gov’t intervention to lower the rates further, but this plan seems to be more about permitting a greater % of owners to take advantage of rates as they now stand. Can any mortgage brokers out there take a guess, or will we have to wait until March 4th to find out?
Rob- welfare recipients are not the cause of the crash. They are the least of our worries- and many of them are suffering even more than you know.
joe- I honestly don’t know enough about this sort of thing to know what anyone should plan for. I think though, that if people had to wait to have enough money in the bank to be unemployed for a few years no one would own a house. It’s a great idea- and I think most people actually did have a cushion- but when things like this happen, or you have a medical disaster- all those things you can never prepare for no matter how responsible you are- the only response I have is Sh*t Happens. I know- it happened to me and everything I had was wiped out- who cared I had worked hard all my life, was always responsible and saved money? And I never lived large, as it were- I never spent thousands of dollars on stuff, or ran up humongous bills. I never even took a vacation in over 15 years. Still got wiped out by circumstances I had no control over, and thought I had some reasonalbe preparation “in case of.”
That said, i think foreclosure will be a relief to some, but they will still be punished in credit ratings, etc. I guess what makes me angry is that those who stand to get hurt the most are getting punished the most. Where’s Madoff? Still living in his fancy apartment. Where are all the CEO’s and finance people who overreached? Most of them still have their very substantial savings, and homes and granite countertops.
More middle class housing is something you won’t see. Knowbody is fighting for the middle class… As for this bailout of people who bought too much house ,it is another scam to make our money worth less and give welfare to those who didn’t play by the rules. I thought living within my means was the right thing to do. Sheesh I should have just bought that Brooklyn Heights townhouse for 4 MILLION a year ago and just asked the Gov for help this year…
bx — I think anyone who makes a 30yr financial commitment should plan to be unemployed for at least a couple of years of that. I think to NOT do that, you’d have to be willfully blind.
anyone in foreclosure can go rent a similar house cheaper now, so I don’t really buy the “social cost” thing. I think the big worry in government is that walking away from an underwater mortgages becomes “no-longer sleazy”, and everyone just does it — then all the banks fail and the motor breaks, or breaks worse. propping up prices is an attempt to prevent a mass sleazyness from drowning the economy.
we need more public housing. REAL affordable to the lower and lower middle class public housing. NOT more welfare recipient housing, just working class housing. i dont think that’s a popular sentiment though, nor do i know if it would help with anything.
*r*
Something has to be done to stop home deflation before things get worse, like 25% unemployment. No plan is perfect, and I’m sure this is not either.
Funny tho when we pulled the ‘moral hazard’ thing with Lehman just about every conservative publication (WSJ, for example) and economist has called that a huge mistake.
Pretending the free market rules and just let things happen and it will all come out for the best will not work right now, as has already been demonstrated. Even Greenspan has been chastened.
Very good questions, snappy. I also wonder about what the solution is and I keep thinking that all these foreclosures are not about people who got in over their heads. It’s about people who were responsible, and kept their bills paid and worked hard, only to see it fall apart with the crash of the economy. Sure there are those who should never have bought houses- and I blame the lenders who told them they could. But millions of people have lost jobs they’ve held for years, gone through their savings and are treading water- should they be punished for the financial excesses and greed of the banking industry?
And then there are all of us renters who are trying to keep our heads above water. None of this is right or fair- so to all those naysayers who would rather see foreclosures happen- what’s your “people” solution? Because as far as I can see, the desire to punish failing homeowners for real or imagined transgressions seems to be more popular with some folk than actually finding solutions that work.