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February 22, 2009

President Obama’s Housing Plan Will STEADY The Market For All of Us

happy house President Obama proposed a housing plan last Wednesday that will help to start clearing a path that will end the foreclosure crisis we’re in.  It’s not perfect but it’s a GOOD start!

Yes, it will help some people who don’t “deserve” to be helped, just as the bank bailouts have helped Wall Street executives – none of whom deserved to be helped. Let us be reasonable, realistic and rational – there is NO perfect solution to this huge problem.  If you ask 100 of the greatest economic minds to come up with a solution for this crisis you will get 100 different answers that will each have merits and flaws.  

The ninety percent of us who were not naïve or fooled by the smooth-talk and blarney of greedy mortgage brokers under normal circumstances would never be asked to bail out the 10 percent that needs it — but these are not normal times.  If we don’t help those who are destitute right away we will all be pulled into a deep dark hole that none of us will be able to get out of anytime soon.  This is our choice plain and simple; help those who need help or continue to bitch, moan and do nothing and see our economy plunge to depths that will make today seem like the good times. Stopping the cycle of foreclosures is critical and is the only thing that will slow our country’s downward economic spiral and help the markets.

President Obama’s Housing Plan will help people who got plain-vanilla conforming mortgages and who have never fallen seriously behind on their monthly payments. They will most likely qualify to refinance at lower guaranteed interest rates — even if they owe as much as their house is worth.

It will also help people who have subprime mortgages or exotic loans, such as pay-option adjustable rate mortgages.  These folks might qualify to keep their current loans but will have them modified to make the payments more affordable.

The mortgage modifications in the plan include three essential elements that will bring us stability and help homeowners who have one home that they are living in. These mortgage modifications will only apply to the existing loans that have caused all the trouble we’re in.   These modifications will not apply to loans made in the future and will therefore not hurt the mortgage market.

The first element will help homeowners currently at risk of foreclosure. It would provide cash incentives to lenders in exchange for modifying a loan until the borrower can comfortably pay it. Lenders would receive the incentive for modifying the loan before it becomes delinquent.

The second element is for homeowners who are still making their mortgage payments on time but can’t refinance because they don’t have enough equity in their homes and owe more than their homes are worth. If a homeowner’s mortgage is held or guaranteed by Fannie Mae or Freddie Mac (which 2/3 are) the homeowner would be guaranteed a lower interest rate and allowed to refinance.

The third element allows Fannie Mae and Freddie Mac to expand their mortgage lending by pledging an additional $200 billion in government capital. Since private lenders are still refusing to make mortgage loans, it makes sense for the government to encourage Fannie Mae and Freddie Mac to lend and start the credit wheels rolling again.

The Obama administration is wisely taking advantage of the government’s new ownership of Fannie Mae and Freddie Mac by putting the two entities to work for the people of America. 

At the same time the Obama administration is offering aid to responsible homeowners who might be infuriated with the idea of helping “irresponsible” homeowners.  Our fellow citizens who read the fine print and made smart fiscal decisions by purchasing homes they could afford but were whacked by the housing bust will benefit from lower interest rates and other resources. This is the administration’s way of acknowledging that they see and hear the frustration of the masses and will extend a hand with some assistance to the responsible ninety percent.

The very capable and intelligent Shaun Donovan, Secretary of Housing and Urban Development believes that by doing all these things they will be able to stop most of the out of control foreclosure, stop property value from depreciating while simultaneously increasing property value across the nation by approximately $6,000.  This would be great since we’ve only seen housing prices decline these past two year.  Yeah for some growth!

President Obama still has to get some of these vital proposals through Congress. Republicans and financial service lobbyists has already declared a ferocious opposition to the proposal to change the bankruptcy law that would allow judges to modify distressed homeowners’ mortgages.

Now is not the time for selfishness – think of your fellow citizens in places like Nevada, Florida and California where foreclosures have reached a critical mass. In these and other states foreclosed properties are driving down the value of homes in communities, property taxes are not being paid, streets are not be cleaned, garbage not being picked up and teachers, police and fire men are being laid off.

It is predicted that if something isn’t done now, there could be as much as 8 million foreclosures over the next four years.

Americans are ready to move forward and start the healing of America.  Since President Obama announced his plan on Wednesday, mortgage lenders have already reported a dramatic increase in the number of calls from homeowners who want to refinance. LendingTree.com has said that refinancing volume shot up 88 percent over the previous week because of Obama’s plan.

The plan may not be perfect but it is a step in the right direction and will stop the foreclosure roller coaster and help credit to start flowing again.

What’s good for the people is usually not good for politics.  Let us do what’s good for the people and get beyond party politics, principles and philosophies so we can get stability in our financial markets. WE need stability, stability and more stability now.  Let us think more about WE as a nation and less of ME as an individual as WE go through this time of national crisis.

America is still the greatest country in the world, let’s work together and keep it that way!




  1. Love the new look, Paulette!

    The president’s plan isn’t going to help many where I live. According to news reports I saw this morning (see <a href=”http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/22/MN4R1621N4.DTL&type=business&tsp=1″ title=”Few in Bay Area qualify in housing rescue plan”) the plan will not help 90% of Bay Area homeowners. I don’t know yet whether I’m one of the people it will help or not. But this strikes me as another example of Washington forgetting that some areas of the country cost more than others and therefore won’t qualify for this kind of help. Still, I think it’s more than what Bush would have done.

    Comment by deannaizme — February 23, 2009 @ 1:50 pm | Reply

    • Hi Deanna – I realized that the other day. I think the maximum mortgage that this will help is $420K and you can’t get a ‘decent’ house in your area for that!

      I think they will have to make some adjustments but it’s a start.

      I am amazed at all that Obama has accomplished in 4 weeks! He and his team are really working hard. He’s done more in 4 weeks than Bush did in 4 years. Not everyone agrees with everythign he has done but ‘you can’t please all the people all the time’.

      I wish him much success and all his endeavours because we need things to work.

      It was time for a change Deanna. I like the red – it’s vibrant.

      Comment by Paulette — February 23, 2009 @ 2:13 pm | Reply

  2. High fives for the new look.

    Good work on this post. You’ve done well at look at it in positive light, thus minimizing the focus on the opponents. For sure … we’re all in this together!

    There seems to be a lot of people out there saying “let ’em fail” … meaning businesses, banks, and even people. But they never get into the domino effect b/c they seem to believe that it won’t affect them.

    2009 is off to a bruising start … and troubled waters are still ahead … sure hope it’s smoother later in the year.

    Comment by afrankangle — February 23, 2009 @ 2:16 pm | Reply

    • Frank – I know a lot of us have worked hard for years and years to build up a nest egg and we just want back what we’ve worked so hard for – I understand that. I want back all I have lost.

      But I also understand that we won’t get anything back or won’t have the potential to earn anything additional if we don’t steady the market and get back on track. Right now we’re in a dark tunnel. We need to get out of the tunnel and on a financial dirt track and continue on until we can reach financial paved roads and then the financial super highway again.

      Once we get out of this mess we will all (nationally and internationally) have to start spending what we really have and stop using so much credit. We have to rebuild the world’s economic system.

      We’re all in this together. If this continues even those who have $50 million in the bank will start to feel a painful pinch.

      Even if someone lives in a well to do neighborhood and their house is worth millions, if their neighbors investments go south and they can’t pay their bills and taxes the entire community will start to feel it.

      If someone has a middle class income, is currently employed with a good salary and their company can’t get credit to help pay its bills and meet payroll and that person gets laid off then that person will feel it and eventually their community will feel it.

      If someone lives in a trailer park or government housing and the government can’t give them their monthly checks they will feel it.

      If someone’s student and their parent(s) can’t afford their tuition or there are no more scholarships or grants they will feel it.

      Everyone is impacted by what’s going on. We’re all in this together and the smart thing to do is to work with President Obama and support him so we can all get out of this mess.

      P.S. Thanks for the high five! 🙂

      Comment by Paulette — February 23, 2009 @ 2:46 pm | Reply

  3. Nice info! Very cool post.I have looked over your blog a few times and I love it.

    Comment by Loans — February 26, 2009 @ 4:05 pm | Reply

    • Hey Loans – we try to keep the posts informative and diverse.

      Thanks so much for stopping by!

      Comment by Paulette — February 27, 2009 @ 1:51 pm | Reply

  4. I agree, we are all in this mess together, like it or not. And it is going to take ALL of us to help fix it.

    The only thing that I don’t see anyone saying is where the money is coming from for all these bailouts, and how it will be repaid. This is problematic for me. It’s like no one sees the bottomline truth. We are all looking for an immediate fix, and there are none. Our president is doing his best, he is trying with what he has available, but is ANYONE looking at this long term ?

    And it is not just the housing market that needs help. I would like to know why the prices of food and have not gone down equal to the price of fuel. I would like to know, why we aren’t using oil from our own soils, not foreign. (listen to the message..its long but well worth your time. http://kenkelsey.vox.com/library/post/energy-non-crisis.html )

    It’s not just our house payments out of control, its our electric, water, homeowners and auto insurance, health insurances etc, that have drained us of what little savings we might have had,much less our meger incomes. We get increases in our utilities, insurances etc, because the companies need to maintain a PROFIT level. But who do we have to back charge to maintain our profit ????, muchless just have enough to pay the rising costs to live day by day.

    This country needs to keep its jobs in this country NOW and ALWAYS !!!! I am really sick of seeing “Made in China” on every label of the items I purchase.

    I think we the people of this country, need to start speaking out, like our forefathers. We have become silent and complacent, just grumbling and accepting what comes our way.

    Comment by itellitlikeitis — March 10, 2009 @ 11:17 am | Reply

    • itellitlikeitis – I agree with you and I think most of us are as frustrated as you are. Government regulation has been lacking in many areas for way too long.

      Now that we’re seeing the results of lack of regulation of our food and drug administration, health and human services departments, department of agriculture, our department of commerce, department of trade and development, etc we know want to see action right away. I believe that President Obama is on the right track is trying to right situations that are so bad that maybe we can’t even comprehend for bad things are. We have to give him a chance to do his job.

      He won the election by a majority of votes and I believe that the minority (the Republicans) need to back off so that he can do what we the people want and expect him to do. But the Republicans are more interested in voting against what we the people want because they want to be able to say he wasn’t successful.

      I don’t believe that we should tolerate the Republicans stopping President Obama from doing the work that we the people want him to do — it’s almost that simple.

      Keep the faith and when President Obama needs our help be sure to call your Congresspersons and Senators and tell them to support our President.

      I hope we talk again soon.

      Comment by Paulette — March 10, 2009 @ 1:20 pm | Reply

  5. Politics are the ultimate in corrpution as far as I can see. We hear during the campaigning that this will be done and that won’t be done, and its seems those promises fall by the wayside, when the job is actually being done.

    President Obama signed that bill that had more than 8000 earmarks in it, when he clearly said he wouldn’t do that. The Republicans are critisizing him for it, yet 90% of those that were slid into the bill were from Republicans. Yes I agree, President Obama should read EVERY page of the bills he signs into effect, and I understand you have to give a little to get a little.

    It’s not just about the bill, its how it done. Do anyone of you ever question why any one senator or congressman, or elected official votes the way they do, or why they push so hard to sway votes ?

    Is it because they are getting paid off by the lobbyist ? Is is because the issue they are promoting is worthy ? What is really going on behind those public closed doors ??

    Do any of you ever ask, why the general population are not privy to a full disclosure budget report ? It is the American people’s tax dollars that pay for it, so why are we not getting the information on how it is being spent ?

    This country is now so deep in debt, we will never see the light of day. The country cannot file bankruptcy, so these borrowed monies have to be repaid somehow, some day.

    I understand we have to do this in an attempt to recover from the economic crisis we are in. I just think its time America call in some of its loans, and use our own resources. No more outsourcing jobs, no more foreign oil since it is right here already on our own soil !

    Americans need to band together and send a unifide message to our government that we will stand together until these issues are addressed and resolved.

    I am very proud to be an American, but I am so disappointed in the American government, and this sentiment goes all the way from the top, down to our local city officials.

    Comment by itellitlikeitis — March 12, 2009 @ 10:23 am | Reply

  6. Nice post.

    Comment by EnjoyMedia — March 17, 2009 @ 1:55 pm | Reply

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