Obama to stop foreclosures and help the housing crisis
Today is the much anticipated unveiling of the Obama's administration to stem the foreclosures, a development I will be watching very closely. As of now the price tag is coming in at 75 Billion, which after the gargantuan pork monstrosity does not seem like a high number.
The basic principle is to save people who are now holding mortgages they can no longer pay, most likely ARMs whose rates have jumped. Due to housing values dropping and equities vanishing a lot of the people are stuck in houses and have no ability to refinance.
The plan as of now calls for 50 Billion from existing bailout money, although it is unclear as to which bailout we are talking about. For example the stimulus package allocates over 13 billion to section 8 housing, public housing and low-incoming housing, so will this be an additional 50B more? Or will this be coming from TARP? If it's coming from TARP, then this certainly violates the original principle behind the program - that is to shore up banks and provide liquidity. Unlike the stimulus package, TARP was originally a loan that the banks were going to be paying back at a hefty rate.
Another $25 will be coming from Freddie and Fannie, aka the taxpayers considering neither Freddie or Fannie are solvent without taxpayer money.
This money will then be used to refinance loans of those individuals who did not read the rules and terms before signing their ADJUSTABLE rates. Why? Because people were greedy and assumed that house prices will continue to rise indefinitely. As previously discussed, responsible individuals will be paying for the mistakes of others.
Specifically the plan is to reduce monthly payments to a certain percentage of one's income and the rest will be subsidized. Somehow Obama claims that his plan will help those who "played by the rules and acted responsibly". Really? You mean, I stand to gain from this somehow?
DOUBT IT.
In my previous rant about the middle class being screwed, one particular fact stood out. According to our gov't those mortgages that were adjusted, more than half failed within half a year. Going to be a long 4 years.
The basic principle is to save people who are now holding mortgages they can no longer pay, most likely ARMs whose rates have jumped. Due to housing values dropping and equities vanishing a lot of the people are stuck in houses and have no ability to refinance.
The plan as of now calls for 50 Billion from existing bailout money, although it is unclear as to which bailout we are talking about. For example the stimulus package allocates over 13 billion to section 8 housing, public housing and low-incoming housing, so will this be an additional 50B more? Or will this be coming from TARP? If it's coming from TARP, then this certainly violates the original principle behind the program - that is to shore up banks and provide liquidity. Unlike the stimulus package, TARP was originally a loan that the banks were going to be paying back at a hefty rate.
Another $25 will be coming from Freddie and Fannie, aka the taxpayers considering neither Freddie or Fannie are solvent without taxpayer money.
This money will then be used to refinance loans of those individuals who did not read the rules and terms before signing their ADJUSTABLE rates. Why? Because people were greedy and assumed that house prices will continue to rise indefinitely. As previously discussed, responsible individuals will be paying for the mistakes of others.
Specifically the plan is to reduce monthly payments to a certain percentage of one's income and the rest will be subsidized. Somehow Obama claims that his plan will help those who "played by the rules and acted responsibly". Really? You mean, I stand to gain from this somehow?
DOUBT IT.
In my previous rant about the middle class being screwed, one particular fact stood out. According to our gov't those mortgages that were adjusted, more than half failed within half a year. Going to be a long 4 years.
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