Obama's Housing Plan Sucks

[Oregone]

Sorry. It really does. A measly $75 billion aimed at the core of the problem, which initiated the economic collapse? He is only looking to help 9 million homeowners? He is going to subsidize banks, who are borrowing government money in the first fucking place (he is now paying them to lend our money out)? And its only going to help government backed loans, which only contribute to 20% of the nationwide problem (and only those deemed "troubled" by paying more than 31% of their income in mortgage)? Will it really ignore all other homeowners, who our country desperately needs to have spending and consuming in our economy again?

Is this a joke?

Is this what we've all been waiting for to solve this?

Is this $75 billion going to do a damn thing at the end of the day?

=======================================================================

We need a direct government to consumer loan branch (with low interest, low closing cost loans) NOW for ALL Americans (up to certain values). If you refi'ed a $250 K/30 year loan at 6.25% ($1539 payments, with $273 to principle), and brought it to 4% loan your payment would be $1193 ($360 of which going to principle). That is a monthly savings of $346, and an annual savings of $4152. The consumer would be paying the government around $10K a year in interest to borrow this money (and that is called *profit* that can be used for social programs)!

Not only would the government own these assets (its originally their loaned money after all), and stand to make tremendous profits over their traditional bank loans, but the banks would also have instant cash injection for ever single loan that consumers refi (which would end the credit freeze). You would see:

1) ALL consumers(who refi) instantly have more money from smaller payments to inject into the economy (as much as $400 dollars!)
2) Such consumers instantly get more wealth in equity from principle payments
3) The government would be setup to profit from a 4% loan, compared to their current 0% to 1% loans to banks that they actually subsidize
4) Banks holding mortgages of troubled homeowners would be able to unload them and have liquid cash injected for lending
5) Every saved home would contribute to an immediate market stabilization
6) Eventually banks who could not compete in the free market and make marginal profits would wither. The rest would become much more lean and efficient for the future.

Am I missing something here? When the government can help EVERYBODY (including banks unfortunately) and PROFIT from it, why are they coming up short? The price tag isn't the answer (we've already pissed trillions away on this mess). Whatever cash isn't produced up front creates debt, but medium yield 'mortgage bonds' can also be sold generate income for this (and what the hell else does anyone have to invest in these days?).

Why could Obama's plan even be considered reasonable in light of this?

[peace13]

1. Number one, the bank deals were done before he got there.

That might be important to remember. Now start from there with a little less hostility.

[LostinVA]

3. Too bad -- the Feds get to make the rules on things like this

[Oregone]

4. It still sucks

And Im glad to be hostile about it. Its pissing in the wind when the problem could forever be fixed. If only the American culture wasn't afraid of the word "socialism", we would be able to actual solve these problems.

[Romulox]

53. Obama voted for the TARP. FYI. nt

[LostinVA]

2. I 100% agree on a Government-backed 4% refi plan

And, to streamline it (I was talking about this with my wife last night), there's no involved paperwork if you're current with your payments, and have a good payment record. It could be a one page app that is put through on the spot. The whole system could be put in place in three months, tops.

This would save us soooo much money every month. We could pay off the loan faster AND have money for improvements -- and maybe even a nice dinner out!

[Oregone]

5. It would drastically shift the entire existing social paradigm...

Things would drastically shift from a society of the Owners (financial institutions and established Old Money) and the Ownerless. The People, as a whole, would own and profit from the loans, and everyone would have a real chance at owning and building equity. It would truly initiate a new age of empowerment and entrepreneurship in our country (and I have no idea if the end result would be positive or negative in light of recent events). But yes, it would be an almost instant "fix" in a matter of months for everyone, that would revitalize our economy.

[LostinVA]

7. It would also totally free up money for use in the economy

AND, the Financial Industry would no longer be peevish and petty Gods.

[Raksha]

62. Now THAT is what I call an "Ownership Society"!!!

Re Things would drastically shift from a society of the Owners (financial institutions and established Old Money) and the Ownerless. The People, as a whole, would own and profit from the loans, and everyone would have a real chance at owning and building equity. It would truly initiate a new age of empowerment and entrepreneurship in our country (and I have no idea if the end result would be positive or negative in light of recent events). But yes, it would be an almost instant "fix" in a matter of months for everyone, that would revitalize our economy.

[SoCalDem]

8. A simple registered letter to all mortgage holders would do the trick

Just a letter saying that on a specified date, your NEW mortgage interest would be 4%..no fanfare needed..just staple to the mortgage docs & you're good to go..

the "details" would be between your mortgage company & the govt.

[LostinVA]

10. ooooo -- even better and easier!

I am totally compiling all of this into a letter and sending it off to my Critters... even though it will do no good.

[Oregone]

15. I was recently planning on writing about this at least to some "experts" to see if I can float it

Until Obama announced this morning. So the wheels are probably in motion for his $75 billion dollar plan.... (Im the pessimist)

But remembered, this is essentially a government owned consumer bank (though it runs for profit). In other words, its the devil (socialism), and Americans may fear it.

[Raksha]

70. Getting their interest payments down to 4%, 30-year fixed

would get them over their fear of socialism faster than anything I can think of!!!

Re But remembered, this is essentially a government owned consumer bank (though it runs for profit). In other words, its the devil (socialism), and Americans may fear it.

[renate]

74. I love that idea

Have you submitted it to http://www.recovery.gov/ ?

[snappyturtle]

9. Sounds good to me! We have done the same surmising...it's so simple!

[babylonsister]

6. There are some smart people out there who beg to differ-

here's one... Me, I'll wait and see before going off half-cocked.

http://www.prospect.org/csnc/blogs/tapped_archive?month=02&year=2009&base_name=housing_plan_reax#comments

HOUSING PLAN REAX.

I e-mailed David Abromowitz, an expert in housing policy at the Center for American Progress, to get a very preliminary reaction to the administration's plan to prevent foreclosures. Noting that this is a very complex plan and that the devil, as always, is in the details, Abromowitz offers this first reaction to the administration's principles:

The Obama plan is a welcome change of course from the last few years, on 3 counts: 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.

Also, by endorsing a bankruptcy change benefiting homeowners who owe more than their house is worth, they are signaling that lenders will no longer be able to simply try to wait out the problem or march forward with a foreclosure. This should help motivate modifications, in addition to the specific cash incentives for servicers and mortgage investors in the proposal.

And for the first time, by directly spending an estimated $75 billion on efforts crafted to accelerate widespread loan modifications, the Executive Branch is allocating major funding for the benefit of homeowners.

I think Abromowitz is particularly right about the incentives to motivate modifications: the key to this plan is getting mortgage holders and servicers out of their game theory-style security dilemma, where waiting out the crisis may be good for an individual lender but bad for the housing market and economy overall. The plan can't be a bribe for the lending industry -- hence the support for allowing bankruptcy judges to modify mortgages -- but it can grease the wheels to get loan mods rolling.

-- Tim Fernholz

[Oregone]

12. Sounds like he is just playing cheerleader

"I think Abromowitz is particularly right about the incentives to motivate modification"

Every "incentive" is essentially a subsidization of payments to the bank. Banks, who are borrowing this money at 0-1% from the government are to be paid to loan it at such a rate where the government is losing money by making loans. How the hell does that make more sense than the government profiting off loans they make themselves to consumers?!? All this is, is shifting more wealth from government coffers right into the banks, all while the smoke and mirrors put smiles on our face.

"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."

That conservative rhetoric was the smartest thing the Republicans backed in a century. Even if someone doesn't need it, our economy needs people to have it. If they can have it without the government borrowing it from our children (tax cuts), all the better. Even if you aren't troubled, consuming goods and increasing demand in our economy is essential to recovering.

BTW, off topic, did you know the top 1% already borrows money at 4% when they want to, so this definitely isn't for them. Those with millions of dollars in holdings get offers from banks (who borrow it from our government) for these behemoth, low interest credit lines for projects. I just recently learned this from an old family friend we've worked for, for ages (who married into money). Essentially, banks act as devices to allow these wealthy people to cheaply siphon government funds for their projects, they will grossly profit from.

"The Obama plan is a welcome change of course from the last few years"

Yes, it is welcome because it is different, and although he makes some points, it is not nearly sufficient at addressing the problem or causing a significant shift in the problem. It consists of very little money (much of it is probably just for subsidizing the banks) and is targeting a very little number of family.

[Thrill]

45. So anyone who disagrees with you is just playing cheerleader?

[readmoreoften]

14. That's called an ad hominem argument. There are also "smart people" who disagree with him.

Mute point.

[snappyturtle]

11. yep. 5 th K&R! I think the plan stinks too. nt

[endarkenment]

13. 7) real estate revalued at current market value

with the difference going to the 'toxic assets bank'. Home owners stuck with loans against the housing bubble fraud inflated prices should be able to have them rewritten for the current market value, minus any principle they have already paid off. Quite a few people would transition from 'in debt' to 'debt free'. Others would see vast decreases in monthly payments on top of the reductions you outline above.

Why should only the billionaires get to rid themselves of the loss column on their balance sheets?

[Oregone]

17. Well, I wanted to start with baby steps and provide as little objectionable as possible...

And what is objectable about a 4% refi coming straight from the people, which interest is paid straight back to the people?

I understand something needs to be done with that issue you mention (this alone may save many paying interest on non-existent equity for the short term). But I didn't want to throw it out there and bundle it in for the naysayers to pick at.

[endarkenment]

36. "paying interest on non-existent equity "

That is the crux of it. The people who sold that "non-existent" equity are making out like bandits in this mess. The people who own the banks that hold the mortgages (and the trillions of fictional dollars in bullshit leveraged scams built on them), the billionaire stakeholders, are getting 'bailed out' of their little problem, but the working stiffs, the peasants who bought houses that are now worth far less than the price they paid for them are stuck "paying interest on non-existent equity ", even at a reduced rate as you propose, and that is just wrong.

[Fire1]

33. Amen!

[sinkingfeeling]

16. Why stop there? I want them to go retro and give me back all that extra interest I've paid since I

signed the note taking out my loan! Then maybe they could pay for my yearly property taxes and force my insurer to reduce the cost of my home owners' policy!

I don't agree with your 'solution'.

[Oregone]

20. You don't agree? You don't think the government should loan to consumers?

You think instead the government should loan to banks (And then subsidize the payments), who in turn loan to consumers?

Well....how about this......what if the government purchased an existing bank (100% of its shares), so its still a bank, which receives 1% loans, and re-loans them out at 4% to consumers? In other words, what if we just took a normal bank, bought out all its shares, and offered these low interest loans (and other than that, it operates the same as any bank)? You disagree with that?

[sinkingfeeling]

23. I said to nationalize the banks that refused to loan money before the TARP was even passed. However,

it seems to me that many here want someone/something to wave a magic wand and relieve them of all the debt they've spent years accumulating. I strongly oppose those who are saying, 'let's just stop paying on our credit card bills, mortgages, student and car loans'. That's just stealing.

[Oregone]

26. How is this a magic wand? Its just a plan that would allow reasonable REFIs...

At the same rate many of the top 1% are getting....how is that "magic"? Why is a 4% loan magic? Are us poor folks not supposed to actually be able to pay stuff off and have reasonable payments? The idea of such "magic"?

What is magic is convincing people that their government should pay, or subsidize if you will, banks to re-loan out money. And that is magic that works...

This isn't about relieving me of any debt (yeah, I got just a $100K mortgage I could do without). This is about a plan that would inject cash into the consumers hands, and hence the economy, and generate a profit for the government.

[n2doc]

18. your numbers are off

4% 30 year 250K loan has payment of $1193/month. But otherwise I agree, and they could also make these loans available without the large fees (3-5K) that now are being charged.

[Oregone]

21. Lemme fix that. I fudged up looking at amoratization table...

I thought that was a bit high.

[n2doc]

44. However, if the rate were 1%...

You would be darn close. I can dream, can't I? Especially since the admin seems to have backed off of its efforts to push down interest rates.....

[Oregone]

47. Yeah, but then you are approaching another philosophical argument...

Shouldn't there be a cost to home ownership? Doesn't the government have a right to profit (and use those funds publicly) for offering a decent service? Etc....

Yeah, itd be nice.

[n2doc]

67. I didn't say it was fair....

but one can dream. I guess in this world only the super rich get billions handed to them (not a crit of your comment just a comment on the way things are)

[Chulanowa]

19. Is it better than nothing, though?

Obviously it's a band-aid on a bullet wound. But sometimes you need that band-aid there while you're in the ambulance to the hospital (or whatever similar metaphor you choose)

Unfortunately I don't think we'll ever have an administration that does anything useful in one fell swoop. Obama's not going to do it, at least. Still, I prefer steps in the right direction rather than total apathy

[Oregone]

24. Im not sure to be honest

It may help a few people, but if it doesn't fix a rapidly deteriorating economy (which this would do by injecting more capital into consumers' hands and ending the credit freeze), those people could still be vulnerable when they lose their jobs and have no income at all.

You know, is all projection. But if you aren't going to completely solve an economic armageddon, well, then its still an economic armageddon. No matter who the 75 billion touches, it may mean nothing if the economy continues to falter (its not like were going to relocate homes to Fantasy Economy Land--they will still live and work in the shit).

[Fire_Medic_Dave]

22. Why do you use we when you don't live here and don't pay taxes here?

[Oregone]

25. I still have a mortgage here, believe it or not....

But beyond that, habit. That aside, the entire world economy depends on what the US does right here. This is a step that can touch countless lives in numerous places, by staving off a global depression. That is a bit important, I would think.

[Fire_Medic_Dave]

27. So you do pay taxes here.

[Oregone]

29. Not income.

It would be county taxes (property taxes) that go to schools and roads in a small impoverished coastal community. I can live with that. Other than that, I file a 1040NR for now on.

So......you disagree with the merits of what I am saying?

[Fire_Medic_Dave]

34. I have thought for some time that there were better ways to deal with it.

You realize of course that your property taxes pay someone's salary. That person pays income taxes that go to fund the military. Not that I'd want you to lose any more sleep.

David

[Oregone]

38. At some point, you just have to say, Fuck it....

I mean, hell, everything we do eventually creates carbon emissions. Does that mean that you 1) kill yourself, 2) give up, 3) minimize it and do your best.

I minimized my bloody-hand footprint. So, you are wondering about the merits of what I was suggesting here, or just kicking dirt my way?

[Fire_Medic_Dave]

42. I spoke to your suggestions.

I agree the plan is bad. There were far better ways to deal with the problems.

David

[frazzled]

28. Funny, you are proposing the same thing the right-wing Republicans did

http://money.cnn.com/2009/02/01/news/economy/Senate_stimulus_housing/index.htm?postversion=2009020117

and it's been discredited widely.

Besides, how do I know you won't take your money and spend it on a trip to Europe, or buying foreign-made goods that don't contribute to job creation.

I'd like forty-acres-and-a-mule and a pair of diamond earrings. This ain't about you: it's about fixing the economy.

[Oregone]

31. I wasn't aware the Republicans wanted a socialized consumer banking branch

(and actually, they didn't).

"how do I know you won't take your money and spend it on a trip to Europe, or buying foreign-made goods that don't contribute to job creation"

As for the money borrowed, its for a REFI on an existing home (up to some ceiling like $250 K). But regardless, as for the extra money people are no longer paying in interest to private banks, world economies are somewhat reciprocal, and you can only "hope" if it goes away that it may somewhat find its way back. But that is the reality when it comes to not forcing production with government spending (it is the major fault of tax cuts). Anyway, that extra money consumers would have, that isn't going to banks, would otherwise be going be going to a private institution who are not not lending right now. There is no benefit to not doing this, because currently, that money goes into a black hole.

At least if the consumer was paying interest to the government, the public money could be invested into domestic production that creates jobs. The private money saved from the black-hole banks, well, its a crapshoot, but you have to hope it is spent domestically. At least with this model, you can ensure some of the money is being spent. With the other model, where it all goes to the banks....well, thats a major crapshoot.

Yes, its not about me...this is a plan that would touch ALL homeowners and generate government revenue. That would help the economy.

[Barack_America]

32. How much would it cost?

In case you had missed my post below.

Thanks.

[Oregone]

39. I responded below

The more I think about it, maybe nothing. The money is already allocated, and this shifts it into a more profitable and useful venture.

[frazzled]

46. "McConnell Proposes Cheap, Government-Backed Mortgages to Stimulate Economy"

Yes, you and Mitch want the same thing:

Senate Republican leader Mitch McConnell on Monday demanded an amendment to the mammoth economic stimulus package to give government-backed, low-interest loans to homeowners -- a revision that he says will both increase the demand for houses and boost the average household income.

"We believe that a stimulus bill must fix the main problem first and that's housing," McConnell told reporters Monday in introducing a plan to offer fixed mortgages of 4 percent to "any credit-worthy borrower."

Under the "Fix Housing First Act" -- an amendment spearheaded by both McConnell and Republican Sen. Lamar Alexander of Tennessee -- new and refinanced mortgages would be available to homeowners for 4 to 4.5 percent.

[Oregone]

49. Are you sure "government backed" means from the government without private institutions?

Doesn't that term mean "insured" or backed with securities bought up by FM?

Otherwise, if he is on the exact same page, what can I say. Thats one hell of an idea he had there. A broken watch is right twice a day. And even the 'better' party can make mistakes.

Discrediting an idea by saying Republicans had it, well, is an insubstantial argument.

[frazzled]

55. It's not bad just because it's from a Republican ... it's bad because

(1) it proposes the same type of "give the money to the people, because they know best" type of false populism that is behind the lower taxes is always better ideology.
(2) It does not really address the most vast portion of the economic problem: the financial markets. Losses from home mortgages is not actually the largest part of the problem by far (there was a good graph chart in last Friday's NY Times: I can fish it up if you need it). The biggest problem, and contributor, was not the mortgages themselves but the bundled securities the banks made out of them and then gambled with.
(3) You don't "need" a lower mortgage: you just want one. You can refinance, as you always could (why do you have a 6.25% mtg anyway--you could have one in the mid-5s), or if a drop in your home value has made it impossible, the new plan Obama announced will make it possible to do so (at perhaps 5.1%).

I'm not saying all Republican ideas are bad--but your idea, as I mentioned before, would have taken the biggest chunk of the stimulus plan and made it not all that job-creating potentially. So it was really a bad idea to put in the stimulus plan. Now, we are addressing the housing foreclosure crisis, separately: it is not stimulus, so it should be used with precision only to stem more foreclosures and stabilize the housing market. If you're not about to be foreclosed on, you don't need a 4% mortgage. If you are credit-worthy and your house is worth something, you should be able to get a fairly decent refi on your house, even possibly at 4.85 for a few thousand.

[Oregone]

60. Just a few responses here....

(1) In my example, far more money (at the start of amortization) is generated in government revenue than saved for the consumer (currently, and under Obama's plan, this doesn't happen). That money can instantly be used for public works projects to stimulate the economy, if that is seen to be the best way to do so.

Though I do agree that giving consumers the money isn't really the answer all the time because you cannot control spending flow. But, they would be building real wealth at least (in equity), and it may significantly change consumer sentiment (after all-this is far more than any tax cut could deliver). IF you are concerned they have too much free income, raise taxes (we need to anyway).

(2) It actually does address more of the financial market than you realize (and much more than Obama's plan). Every homeowner that REFIs eliminates the chance that they will contribute to banks building further toxic assets (it lowers potential liabilities). Further, upon REFI, cash is instantly injected into the banks, which may help relieve the credit freeze and contribute to positive liquidity.

(3) Yes, I want a lower mortgage, but I cannot afford the closing costs, and bundling them in the loan doesn't justify itself unless Im keeping the house for years (its currently for sell). I think everyone wants to pay less monthly. It would help a lot for many households, though they dont 'need' it. They also don't "need" affordable health care, and are existing just fine without it (albeit a little ill), but it sure as fuck might be nice. Sometimes societies are just built on providing necessities, but they look towards building a stronger society and a brighter tomorrow.

"So it was really a bad idea to put in the stimulus plan"

As were the tax cuts. :) But I agree on that point

"If you're not about to be foreclosed on, you don't need a 4% mortgage."

As I said, a lot of people don't need a lot of things. But with that said, I can surely miss a few payments to make it happen.

"you should be able to get a fairly decent refi on your house, even possibly at 4.85 for a few thousand"

With $100K loan, it would cause $4.4 K to do that. Trust me, I looked into it already. Thats not relief I can believe in.

[bertman]

68. In my neck of the woods, those refi's are hard to come by. Seems the bankers don't

want to lend that money. For some reason.

[Barack_America]

30. How much is the price tag for your plan?

[Oregone]

37. It depends on how many mortgages are REFIed

Now, I should first mention, all spending on this creates "good" debt. With a 4% interest rate, if you lend a trillion, it will ensure the generation of $700 billion if all loans are taken to full term. (Dollar for dollar, you get about 1.72% more back to the government than what you loan out). Lowering the payments alone for people makes these assets more dependable.

I would say, lend as much as we could without undermining our currency. If you have to start with $1 trillion, then fine, as it is worth it. The strange thing is, once the government REFIs a loan, then it pays off the current note holder (which is sometimes the government (FM), and sometimes a bank). If its a bank, who is lending government cash in it borrowed in the first place, guess who ends up with the payoff. In a way, this is all done at very low cost, because as you put money forth for this program, other programs and loans will be paid off with the money spent (you are merely shifting government funds into a more profitable and useful venture, which are already allocated). So in the end, it hard to actually put a finger on what is being actually spent, but it may be far less than the starting cost.

But, I also mentioned the program could be funded by medium-yield "mortgage bonds". Investors can purchase bonds that inject instant cash that will be available to lend. In the end, the government can give a portion of the interest profits to the investors. This would enable the government to REFI more loans without increasing the national debt level. This would be an easy sell, as there are no other stable investments at the time.

Another thought is that whatever profits you make from the loans after a year, you can re-invest back into re-lending for additional loans. That way, the amount you loan can gradually increase without increasing the overall national debt.

[Thickasabrick]

59. Excuse me - but what idiot wouldn't refi at 4%? You are talking about

every mortgage in the US.

[Oregone]

63. Then fine, let it be...

:)

Most of the action would be re-shifting funds that are already allocated. Hell, if the fat cats can get 4% loans, the people should be able to also.

[Two Americas]

69. it is not a "cost"

Public investment in food, housing, medicine and the public infrastructure are not "costs" to anyone except the wealthiest few, and even for them it is a very small cost and they derive much benefit.

Money invested in the people increases productivity, prosperity and wealth. It should never be seen as a "cost." It is the one and only thing you can spend money on that is not a "cost." This is foundational to any and all political views other than libertarian or extremely conservative views.

[Barack_America]

71. Then what is your proposal for rental assistance?

Or is only a 3 bedroom/2 bath house in the suburbs a "right"?

[Two Americas]

72. not sure what you are asking

Housing is a right, yes. Of course. As are food and medicine.

For something to be a cost, it needs to come out of someone's pocket never to be seen again.

Whose pockets?

I would say the pockets of the wealthiest 1% of the population. There would be no pain for them in that even if we took enough to house, feed, educate, and give health care to all.

How did that money get in the pockets of the wealthiest 1%? Where did it come from?

It came from the productivity of the working people.

What would happen if we took that money and invested it into the working people, 99% of the population, and provided for their needs?

That money would circulate in the economy. It would not disappear or be a loss.

But wouldn't people then be lazy and unproductive if we just hand out what they need to them?

That didn't happen with food. We stabilized farming and removed farm credit from the "free market" world of Wall Street investment and speculation and the financial industry, and by that New Deal program the farmers and the eaters are subsidized. The millions and billions of profiteering in the financial industry was taken away from them and is placed on the serve of the producers, the farmers, and the people, the eaters. This did not result in people being lazy or unproductive - quite to the contrary. It led to wealth and prosperity.

[Barack_America]

75. I was trying to point out that this plan, regardless of how it is structured...

is not going to help poor Americans, as they are rarely home owners.

But that is not the focus of the plan, is it? This plan, it seems to me, is a measure to stabilize the economy, rather than a vehicle for social justice. I sincerely hope that President Obama does address the latter, but I'm not holding this plan up as his effort in that regard. I am a believer that there is a limit to how many birds can be struck with a single stone.

[Two Americas]

76. pandering

The program is designed to pander and to compromise. It panders to the upper 10% - the power base in the Democratic party as disproportionately represented here and throughout the party - and compromise with the upper 1%.

When we talk about stabilizing the economy, we need to know whose economy we are talking about. To think that it is all one economy, and that what stabilizes and helps the wealthy few helps the economy and therefore helps all of us is trickle down Reaganomics repackaged.

There are two economies. There is the economy of the investors and speculators. controlled by the wealthiest 1%, and there is the economy of the workers and producers, the everyday people, the economy that we depend upon to survive. It is necessary to decide which economy you are helping. The right says that by helping the investors and speculators, the producers will somehow be helped. The left says that by helping the producers - the working people and their dependents, the every day people - all will be helped.

The degree to which you are helping the economy of the investors and speculators will always be the degree to which you are hurting the real economy - the one we build and are dependent upon if we are to survive.

[Oregone]

73. Lowering the cost of owning a home can lower the cost of renting from the owners...

Regardless, In the example I cited, homeowners are forking over $10K in interest to the government. I wouldn't call that a "right" so much.

[Dawgs]

35. Ah, similar to the plan I proposed a few days ago.

Nice.

:hi:

[Oregone]

41. Yes...

Ive posted in the past and have seen other people mentioning it lately. I hope the idea is gaining enough traction to be taken seriously. But I hope it isn't too late.

[SidneyCarton]

40. Very Well, President Oregone, you have the floor...

Please tell us how you would solve the housing crisis.

(edited for lousy typing.)

[Oregone]

43. I just did

:)

What crisis, when everyone can afford their loans and has money to inject into the economy? Crisis adverted.

[WI_DEM]

48. Yes, and I wish Obama would pay off all my credit cards too.

[Oregone]

51. I don't....

And I wouldn't even suggest a socialized credit company for consumers like a credit card company. That is high risk interest with high yield. Private institutions are welcome to keep trying their hand at that gimmick....


Now, may I mention, in Obama's plan, he is subsidizing banks. Giving free money to bank to lend money that isn't theirs in the first place.

With my idea, the homeowners pay it all back at a reasonable rate. He actually is the one throwing corporate welfare out there. And at least my idea generates government revenue (his shuffles public funds into private coffers).

At what point do I suggest anything about the government paying any loans off? Thats silly. I suggest they allow consumers to REFI them so that consumers can continue to pay them off, AND, have more spending money. And personally, I think this should happen at a waiving of a tax deduction for mortgage interest (because the government would then be counter productively subsidizing payments, well, to them).

[WI_DEM]

77. I was being sarcastic.

[KamaAina]

50. 9 million homeowners ain't exactly chopped liver

there are around 111 million households in the U.S., of which around 32 percent are renters. That leaves 75 million or so homeowners total, of which another 40 percent or so own their homes outright: either paid off their mortgage, or inherited it, or paid cash, maybe. So there are around 45 million mortgages out there, of which Obama's plan benefits 9 million, or a full 20 percent.

[Oregone]

52. Ive read there are more....55+

Regardless of the ~20% figure...why not address them ALL and generate a government profit, as well as free up consumer cash to be injected into the economy? In light of that, yes, it is chopped liver. If this wont, paired with a somewhat anemic stimulus, fundamentally stop the economy from deteriorating further, than it is all for nothing. We need a dramatic change for the entire economy. We don't need a little tinkering here and there on the Hindenburg.

[Gin]

54. the part about the upside down mortgages in the plan doesn't make sense..

if the loan is more than the house is worth... and you have made payments regularly but know this cannot continue...refinancing will do no good unless they refi for present market value...maybe that is the plan but I didn't hear it. The principal has to be lowered.

[Thickasabrick]

61. That won't work. You would have to do that with every owner that

bought during the bubble. Will never fly.

[earth mom]

56. I think you've got a great idea here-it's just too bad that Obama & Congress aren't going to help

homeowners in this way.

Instead they will be giving the banks yet ANOTHER bailout-to the tune of a trillion dollars or so.

The banks are "more special" doncha know?! :puke:

[Born_A_Truman]

57. Um...

These overpriced mortages now owned by the banks (or bundled into mortgage back securities) are what? Written off? Sold to treasury?

[Oregone]

64. Its handled just as any normal REFI is handled.

The original note holder is paid off (and they no longer finance the property). This injects cash into the banks actually. Fortunately, they can turn around and payoff the government, who they loaned the money from in the first place at killer rates. The banks now have more of a certainty over their assets, because they clear out potentially toxic mortgages at the time of the REFI (which could lead to them lending again)

[Thickasabrick]

58. Question. If everyone jumped on a government 4% loan - what would

happen to the mortgage companies?

[Oregone]

65. They would compete in the "free market" or wither....

Personally I find this more attractive than nationalizing them and purchasing their assets (which just gives more public funds to private people).

Look, its a free market...they are welcome to race to the bottom against the government and compete. Maybe they cant get down to 4%, but they can offer better service, like a monthly tank of gas, or pencils, or free T-Shirts. They will figure it out. They have smart CEOs

[bertman]

66. What happens to the folks who are about to lose their homes because they lost their jobs?

They sure as hell aren't going to get refinancing because they can't pay it back without income.

This seems to be a big GAP in the plan. Am I missing something, or did those potential foreclosure victims get thrown under the bus?