Obama's $75 Billion Plan to Save America's Homes

President Barack Obama has announced a $75 billion plan to help counteract home foreclosures -- a move that aims to allow more than 9 million Americans to refinance their troubled mortgages.

The plan has three basic components. One would help homeowners who continue to make loan payments on time, but are paying high interest rates and would otherwise not be able to refinance because they do not have enough equity or their houses are worth less than they borrowed. A second would assist people who are at risk of foreclosure by providing incentives to lenders to alter the terms of loans to make them substantially more affordable to struggling homeowners. The third would try to assure there is plenty of credit available for mortgages by giving $200 billion of additional financial backing to Fannie Mae and Freddie Mac, the two government-controlled mortgage finance companies.

"The plan will take effect March 4, when the administration publishes detailed rules explaining it. Most of the plan can be enacted by Mr. Obama though his executive powers, although part of it - including changing the bankruptcy laws to allow homeowners to seek changes to their mortgages through bankruptcy proceedings - will require legislation. Mr. Geithner said the administration is already in discussions with lawmakers on how to proceed."

Full Story: Obama Unveils $75 Billion Plan to Fight Home Foreclosures

Comments

Comments

To all those who acted responsibly... Drop Dead!

Is it me, or is this just a big, $275 billion dollar middle finger to all the folks out there who acted responsibly? Now, not only did they wait out the housing bubble because prices were unsustainable, now they have to fork over almost a $1,000 per person in taxes to people that lied about their incomes or took out 100% financing or speculated on houses in AZ (or made horrible loans) for a plan that attempts to "shore up housing prices for everyone" (i.e. artificially keep prices high so housing is still unaffrodable for those who waited it out) and that "would not come close to halting the tidal wave of foreclosures" nor "would it provide much help to millions of homeowners who are 'under water,' or holding mortgages that are bigger that the market value of their houses."

The amount of foreclosures out there is ridiculous, but it definitely heavily concentrated in certain places; places, which, without the housing bubble would not have existed the way they did in the first place (or places like Detroit, that, economically, should already be a lot smaller than they were with the bubble). Now, with this plan, even adminstration officials are warning that it won't work, but we're going to throw money at the problem anyways...wtf?

Sorry, for the angry tone, but I am a homeowner in CA that bought a place I could afford on my then current income in 2004 with a reasonable down payment and a long-term fixed rate loan.... so as of 2009, my house is likely underwater. But I'm going to stay, pay my mortgage and take my lumps on the sales side if/when I sell (and am saving money to buy another cheaaper place). Perhaps I should have taken a step back and seen the bubble (as many did), but I really just wanted to own my own place as I was tired of renting. And now, for doing the right thing, I get a big ole chunck of money taken out of my wallet... thank you Uncle Sam.

The responsibly dead

I feel your pain. I am in the same leaky boat, and I wanted to have my own place for all the "right reasons" according to the "American Dream" philosophy....stability, real neighborhood for the kids, investment into the community. I never wanted to see my home as a "real estate investment" though I knew it was and was making the choice because I knew the amenities...ie. LOCATION LOCATION LOCATION...would hold the property's value. well... I also am not surprised, though a little worse for the wear, that this has happened because I just barely managed to weather the RE downturn in CA in the late 1990s. It just is what it is. We are all connected, whether we like it or not...whether we believe it or not. Breathe deeply and keep a bead on what really matters. This too shall pass, one way or the other.

Money For Idiots

Ricardo, I generally agree with your point, and in normal economic times, I would agree completely. But in a recession as severe as this one, I think we do have to bail out the idiots to prevent the economy from crashing so badly that the idiots take down lots of responsible people with them. David Brooks makes this point in today's column, Money for Idiots, at
http://www.nytimes.com/2009/02/20/opinion/20brooks.html?_r=1&ref=opinion

Charles Siegel

I Disagree

The idiots are already taking down lots of responsible people with them (or, more precisely, the fed's past actions are taking down everybody - the responsible and irresponsible alike) and housing prices are falling to more sustainable levels. I think we (or at least myself as a relative youngster) have to come to grips with the fact that much of the economic activity in the US over the last decade has been fake (one fed induced asset bubble after another - finance, tech, real estate...), and that the decks need to be cleared ASAP to seperate the wheat from the chaff (just as tech crashed and all the bubble companies vanished but the strong ones survived, and even thrived afterwards). We as a country have have already been hurt, and will continue to be hurt as this plays out. In my opinion, the bailouts are simply delaying the inevitable. Even if Obama's plan works, who is really going to be helped? Sure, there might be less foreclosures, but that means that home prices would likely still be too high (i.e. higher than they otherwise would be), which is bad for society as a whole, and the public debt burden will increase, which is bad for society as a whole... and that is if it works. Let's just get the crash over and done with so we can move on, despite the pain that that carsh will entail versus the slow pain of the crash with bailouts scenario (rip the bandaid off versus peeling it off slowly).

Agree

Obama is just another political hack and clearly a fan of the "death by a thousand paper cuts" philosophy. Just kick the can down the road - "as long as it doesn't happen on my watch" is the politician's motto.

Senator Schumer of New York,

...who graduated Harvard, said lately during the process of finalizing the bill that Democrats were at work to create "the right balance of carrots and sticks." He presumably understands that the carrot and the stick from which it dangles are two components of the classic ruse.

I do think that president

I do think that president Obama's plan will help americans to get out of the crisis but the solution the Cash Advance Loans I think are the solutions .

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