Obama's Housing Plan

[one...two...tree 2,762]

The details will, of course, make all the difference, but at first blush, the policy looks like a good one.

Seeking to stabilize the foundering housing market, President Obama is offering a plan to help as many as nine million families refinance their mortgages or avoid foreclosure, according to a summary released by the White House on Wednesday morning.

The plan, which is more ambitious than expected, would spend $75 billion to help keep as many as four million families in their homes, and would help as many as five million more refinance their mortgages to take advantage of lower interest rates. [...]

The administration's initiative, called the Homeowner Affordability and Stability Plan, is an effort to slow the rapid decline in the housing market. As the economy drops deeper into a recession, home values are falling faster and faster, and more Americans are losing their houses to foreclosures or distressed sales.

The plan would allow four million to five million homeowners refinance mortgages guaranteed by the government-controlled housing giants Freddie Mac and Fannie Mae. The administration said allowing people to refinance at lower mortgage rates would reduce monthly payments and save families thousands of dollars every year.

It also seeks to allow judges to modify mortgages in bankruptcy court for homeowners "who have run out of options" -- a controversial provision opposed by lenders and many financial institutions.

The policy is aimed at offering lenders incentives into lowering rates, while making it easier for homeowners to lower their mortgages and monthly payments. (The White House published a helpful Q&A.) What's more, by reducing foreclosures, administration officials believe the plan can stop the slide in home prices by up to $6,000.

Atrios summarized it this way: "Basically it tells Fannie and Freddie to refinance loans they have for certain borrowers at a lower rate, and uses various carrots to encourage other lenders to also do so."

Tim Fernholz spoke to the Center for American Progress' David Abromowitz, a housing policy expert, who also sounded encouraged by the outline of the policy: "The plan clearly places foreclosure prevention at the forefront of the overall economic recovery battle. Rather than hoping the modifications might occur as a benefit that would somehow flow from pumping more funds into banks, the plan plainly recognizes the basic facts: If over 10 million more families face the loss of their homes, then surrounding neighborhoods with 5 or 10 times that many families are all cutting back spending and shrinking the economy rapidly. What companies will be borrowing and expanding to sell more products if consumers are still scrimping, cutting costs and staying home? Contrast this plan with, for example, the recent conservative rhetoric during the stimulus debate acknowledging that foreclosures and vacant homes are the problem, but then proposing to reduce everyone's' mortgage rate to 4% regardless of whether they need it or not. This plan instead is targeted to where we most need to focus our efforts."

http://www.washingtonmonthly.com/

[justashooter 430]

so i bought a house that i can afford, and am now being told i will endure a tax burden to help people keep houses they cannot afford? how nice.

[Trumplestiltskin 5,791]

If the thinking is that we as a nation are in unprecedented dire financial straits - then absolutely you should.

[one...two...tree 2,762]

so i bought a house that i can afford, and am now being told i will endure a tax burden to help people keep houses they cannot afford? how nice.

Yep. Just like paying hundreds of billions in taxes for a war you might not have supported.

[Peikko 1,575]

Throwing the baby out with the bathwater is certainly one option.

[one...two...tree 2,762]

Throwing the baby out with the bathwater is certainly one option.

What homeowners should be thinking right now is...if home prices continue to plummet, they're losing equity in their home. A plan is needed to stop the bleeding in the housing market so that home prices will be begin to stabilize, which in turn will benefit all homeowners.

[Peikko 1,575]

Throwing the baby out with the bathwater is certainly one option.

What homeowners should be thinking right now is...if home prices continue to plummet, they're losing equity in their home. A plan is needed to stop the bleeding in the housing market so that home prices will be begin to stabilize, which in turn will benefit all homeowners.

Quite. I don't know if this is a good plan or not, but the theory of making home owners pay for their homes at more reasonable lending rates is a good one. I was referring to A N Other poster

[Craneman 2]

The details will, of course, make all the difference, but at first blush, the policy looks like a good one.

Seeking to stabilize the foundering housing market, President Obama is offering a plan to help as many as nine million families refinance their mortgages or avoid foreclosure, according to a summary released by the White House on Wednesday morning.

The plan, which is more ambitious than expected, would spend $75 billion to help keep as many as four million families in their homes, and would help as many as five million more refinance their mortgages to take advantage of lower interest rates. [...]

The administration's initiative, called the Homeowner Affordability and Stability Plan, is an effort to slow the rapid decline in the housing market. As the economy drops deeper into a recession, home values are falling faster and faster, and more Americans are losing their houses to foreclosures or distressed sales.

The plan would allow four million to five million homeowners refinance mortgages guaranteed by the government-controlled housing giants Freddie Mac and Fannie Mae. The administration said allowing people to refinance at lower mortgage rates would reduce monthly payments and save families thousands of dollars every year.

It also seeks to allow judges to modify mortgages in bankruptcy court for homeowners "who have run out of options" -- a controversial provision opposed by lenders and many financial institutions.

The policy is aimed at offering lenders incentives into lowering rates, while making it easier for homeowners to lower their mortgages and monthly payments. (The White House published a helpful Q&A.) What's more, by reducing foreclosures, administration officials believe the plan can stop the slide in home prices by up to $6,000.

Atrios summarized it this way: "Basically it tells Fannie and Freddie to refinance loans they have for certain borrowers at a lower rate, and uses various carrots to encourage other lenders to also do so."

Tim Fernholz spoke to the Center for American Progress' David Abromowitz, a housing policy expert, who also sounded encouraged by the outline of the policy: "The plan clearly places foreclosure prevention at the forefront of the overall economic recovery battle. Rather than hoping the modifications might occur as a benefit that would somehow flow from pumping more funds into banks, the plan plainly recognizes the basic facts: If over 10 million more families face the loss of their homes, then surrounding neighborhoods with 5 or 10 times that many families are all cutting back spending and shrinking the economy rapidly. What companies will be borrowing and expanding to sell more products if consumers are still scrimping, cutting costs and staying home? Contrast this plan with, for example, the recent conservative rhetoric during the stimulus debate acknowledging that foreclosures and vacant homes are the problem, but then proposing to reduce everyone's' mortgage rate to 4% regardless of whether they need it or not. This plan instead is targeted to where we most need to focus our efforts."

http://www.washingtonmonthly.com/

Weren't Fannie and Freddie coerced to make risky loans in the first place, part of the problem?

Now we are recoercing the same risky behavoir from the same banks to the same loans?

[alienlovechild 75]

What homeowners should be thinking right now is...if home prices continue to plummet, they're losing equity in their home. A plan is needed to stop the bleeding in the housing market so that home prices will be begin to stabilize, which in turn will benefit all homeowners.

Obama just wants to help the "haves" by artifically supporting bloated housing prices. Why does he hate people who want to be first time homeowners? Someone should ask him why believes homeowners must be guaranteed a profit at the expense of other taxpayers and prospective buyers? If home prices went up about 10% each year for most of the last ten years and then decline by what 25%(?), why should anyone be forced to pay 75% more. Certainly average wages and salaries didn't go up that much during the same period.

His last lines about encouraging responsibility was a joke since his policies don't hold everyone responsible.

[one...two...tree 2,762]

What homeowners should be thinking right now is...if home prices continue to plummet, they're losing equity in their home. A plan is needed to stop the bleeding in the housing market so that home prices will be begin to stabilize, which in turn will benefit all homeowners.

Obama just wants to help the "haves" by artifically supporting bloated housing prices. Why does he hate people who want to be first time homeowners? Someone should ask him why believes homeowners must be guaranteed a profit at the expense of other taxpayers and prospective buyers? If home prices went up about 10% each year for most of the last ten years and then decline by what 25%(?), why should anyone be forced to pay 75% more. Certainly average wages and salaries didn't go up that much during the same period.

His last lines about encouraging responsibility was a joke since his policies don't hold everyone responsible.

alc - there are many factors effecting the home values, but if we simply continue to let millions of American families walk away from their mortgages the repercussions will continue to throw our economy deeper into recession. We have to stop the bleeding. On the other side, the banking industry needs tighter regulations on their lending practices. There's no easy way out of this.

[alienlovechild 75]

alc - there are many factors effecting the home values, but if we simply continue to let millions of American families walk away from their mortgages the repercussions will continue to throw our economy deeper into recession. We have to stop the bleeding. On the other side, the banking industry needs tighter regulations on their lending practices. There's no easy way out of this.

Ddin't answer my question about jacking up housing prices. As far as people moving out of their homes, can't they just short sell and rent an apartment and live like I have for decades? My 401K and 457K have lost value so will Uncle Sam pay me the difference to stabilize the stock market?

I hope Obama fails in the short term so I can buy a house at a reasonable price but encouraging people to invest heavily in housing again is like a drug addict who ODs then goes clean until he gets the urge to get high again. It's better to scare people off their housing fix for long time and put their time and money into increasing productivity or even energy independence.

You're probably right about the banking regulations since it's clear bankers look more like gamblers than the sober bankers of yesteryear.

[Ban Hammer 13,360]

so i bought a house that i can afford, and am now being told i will endure a tax burden to help people keep houses they cannot afford? how nice.

Yep. Just like paying hundreds of billions in taxes for a war you might not have supported.

just remember, bush warned you it was coming, and wanted legislation in place too, but it was nixed.

[Trumplestiltskin 5,791]

I think if you sell below the value of the mortgage (as is likely for people who bought a house in the last 5 years) you get hit with a deficiency judgment.

[one...two...tree 2,762]

alc - there are many factors effecting the home values, but if we simply continue to let millions of American families walk away from their mortgages the repercussions will continue to throw our economy deeper into recession. We have to stop the bleeding. On the other side, the banking industry needs tighter regulations on their lending practices. There's no easy way out of this.

Ddin't answer my question about jacking up housing prices. As far as people moving out of their homes, can't they just short sell and rent an apartment and live like I have for decades? My 401K and 457K have lost value so will Uncle Sam pay me the difference to stabilize the stock market?

I hope Obama fails in the short term so I can buy a house at a reasonable price but encouraging people to invest heavily in housing again is like a drug addict who ODs then goes clean until he gets the urge to get high again. It's better to scare people off their housing fix for long time and put their time and money into increasing productivity or even energy independence.

You're probably right about the banking regulations since it's clear bankers look more like gamblers than the sober bankers of yesteryear.

I'm all for a restructuring of the housing market in terms of housing prices, but I'm not sure how you do that. We can prevent people from taking risky loans and we can eliminate predatory lending. We can and should also have tighter restriction on home equity loans, or second mortgages - which used to be a last resort but have over the last 15 yrs., a common practice (because the conventional wisdom of your home value never going down and you could potentially save a lot by consolidating existing loans into one low interest payment). A home, IMO, should be something that most Americans can afford and something that builds gradual equity over a long time - like a stable investment. But all the newly creative ways in finances have taken the value of homes and turned it into a roulette game.

[Craneman 2]

alc - there are many factors effecting the home values, but if we simply continue to let millions of American families walk away from their mortgages the repercussions will continue to throw our economy deeper into recession. We have to stop the bleeding. On the other side, the banking industry needs tighter regulations on their lending practices. There's no easy way out of this.

Ddin't answer my question about jacking up housing prices. As far as people moving out of their homes, can't they just short sell and rent an apartment and live like I have for decades? My 401K and 457K have lost value so will Uncle Sam pay me the difference to stabilize the stock market?

I hope Obama fails in the short term so I can buy a house at a reasonable price but encouraging people to invest heavily in housing again is like a drug addict who ODs then goes clean until he gets the urge to get high again. It's better to scare people off their housing fix for long time and put their time and money into increasing productivity or even energy independence.

You're probably right about the banking regulations since it's clear bankers look more like gamblers than the sober bankers of yesteryear.

I'm all for a restructuring of the housing market in terms of housing prices, but I'm not sure how you do that. We can prevent people from taking risky loans and we can eliminate predatory lending. We can and should also have tighter restriction on home equity loans, or second mortgages - which used to be a last resort but have over the last 15 yrs., a common practice (because the conventional wisdom of your home value never going down and you could potentially save a lot by consolidating existing loans into one low interest payment). A home, IMO, should be something that most Americans can afford and something that builds gradual equity over a long time - like a stable investment. But all the newly creative ways in finances have taken the value of homes and turned it into a roulette game.

Such is life, a total ####### shoot.