| President Obama's new foreclosure relief program | | | | incomes should receive help -- in fact, probably no |
| has been named, appropriately vaguely enough, the | | | | homeowner should receive direct federal government |
| Making Home Affordable plan. Which party, the lenders | | | | help. |
| or the homeowners, are getting a more affordable | | | | However, the point of all these government |
| home is debatable, but the plan is to spend another | | | | foreclosure relief plans has been to stabilize housing |
| $75 billion to fix the housing crisis by covering up | | | | prices, reduce the number of properties facing |
| property values and lowering monthly mortgage | | | | foreclosure, and assist banks in working with |
| payments. | | | | borrowers. Each plan has helped a small number of |
| Seventy-five billion dollars has been allocated to helping | | | | homeowners, and most have targeted only one group |
| close to nine million homeowners fight foreclosure | | | | or another, while leaving other groups to fend for |
| through either a refinancing plan or a mortgage | | | | themselves. |
| modification. This represents an average of over | | | | But the housing boom was made up of investors, |
| $8,000 the government will directly spend for each | | | | speculators, jumbo loans on inflated properties, and |
| at-risk borrower, along with another $200 billion used to | | | | people who did not have to document their incomes to |
| support Fannie Mae and Freddie Mac. | | | | receive a mortgage. Taking these groups out of the |
| The plan leaves out a number of homeowners and | | | | market (by raising lending standards and not relying on |
| borrowers who were instrumental in keeping the | | | | falsified appraisals) and not offering them federal |
| housing bubble inflating. Second homes are not | | | | government assistance will depress housing prices. |
| involved in the home. Neither are jumbo mortgages. | | | | So the government is dealing with a very tricky |
| And neither are those homeowners who own a | | | | situation in attempting to prop up housing prices and |
| primary residence but would be unable to document | | | | help responsible borrowers stay in their homes while |
| their incomes. | | | | simultaneously not offering assistance to the groups of |
| The final group that is left out is the most disturbing. | | | | borrowers most responsible for keeping the bubble |
| MSNMoney describes this segment of homeowners | | | | inflated. If these irresponsible groups are not given help, |
| as "Those who owe so much more than their houses | | | | their foreclosures will lower property values. |
| are worth that a lender would do better by | | | | Unfortunately, it seems as if the government does not |
| foreclosing." Thus, lenders are still in charge of the | | | | know what the final goal is with all of these |
| foreclosure process and will keep taking homes from | | | | contradictory plans. Should they encourage savings or |
| borrowers when it is a better deal for the bank. | | | | spending? Prop up house prices or allow large |
| With close to 10% of all loans on one- to four-unit | | | | numbers of borrowers to fail? Support competition and |
| properties at least one payment behind, Obama's | | | | markets or bail out insolvent institutions? In trying to do |
| mortgage relief plan will leave out a significant portion | | | | all at once, the government is creating more |
| of the housing market. And it is not that investors, | | | | uncertainty and the potential for more foreclosures |
| speculators, and people who can not prove their | | | | and business failures. |