What those ideas are, we don’t know yet. According to the White House officials, Obama will unveil new plans to help the ailing housing market and to reduce foreclosures. He will outline the plans next week in his speech on “job creation”.
Unfortunately, the Administration suffers from short term memory since only a little more than two years ago, he tried to slow down the foreclosure rate and was totally unsuccessful. His last plan was to help between 4-5 million homeowner keep their homes from foreclosure, but the plan (as of May of this year) only help 810,000 refinance into loans with a lower rate. The refinancing initiative will allow certain borrowers to refinance loans that are backed by the improperly operated Fannie Mae and Freddie Mac. As a side note, both Fannie and Freddie have borrowed over $170 million over the last three years because of poorly run plans.
The Obama Administration is looking to make changes to existing programs aimed to allow borrowers to take advantage of lower mortgage rates, which will also include allowing them to refinance the loan even if they owe much more than the current property’s value. While the idea is expecting to help the borrower to free up cash for other spending to drum up overall business activity, it’s most like not going to do so since many don’t have enough money as it is to do more than they already are.
Either way you look at it, Obama and his cronies are grasping at straws to figure out a way to “fix” the economy. The only true way for the housing market to correct itself is to get the government out of the way and let the market correct on it’s own. While Fannie Mae and Freddie Mac account for nearly 90% of all residential mortgages, their time has come for them to be dissolved. It will take years to work out all the paper work to get all the assets of their books, but it needs to be done. The federal government was never intended to be in the housing market wither as a seller, buyer, loan manager or a landlord.
It’s too bad that Barney Frank is too close to the issue of Fannie and Freddie to make any clear decisions on what the right thing is that needs to be done. His life mate is on the board of directors and he doesn’t know how to run a business either.No matter what the government does, it’s going to affect the housing market in a negative way. As long as they are involved it will continue to be dragged out instead of a some-what quick recovery.
Let’s face it, the federal government is doing what they can to help the financial sector from taking another dive into the abyss and asking for more money from the tax payers.