Obama unveils 275 billion dollar housing plan

Obama unveils 275 billion dollar housing plan
Feb 18 10:02 PM US/Eastern

President Barack Obama targeted the housing crisis at the root of the US economic meltdown, with a program which could cost 275 billion dollars and reach nine million homeowners.

The strategy includes 75 billion dollars designed as an incentive for lenders to reduce interest rates to prevent at-risk mortgage debtors joining the millions who have already fallen victim to foreclosures.

The government will also put up an additional 200 billion dollars to bolster efforts by federal lenders Freddie Mac and Fannie Mae to offer affordable mortgages and bring stability to the housing market.

Obama opened the new front in the broad battle against the economic crisis a day after signing a huge, 787-billion-dollar stimulus plan into law, and as he simultaneously attempts to restructure the debilitated US auto industry.

"All of us are paying a price for this home mortgage crisis and all of us will pay an even steeper price if we allow this crisis to continue to deepen," Obama said as he unveiled the plan in Arizona, one of the states worst hit by the crisis.

"When the housing market collapsed, so did the availability of credit on which our economy depends.

"We will help between seven and nine million families restructure or refinance their mortgages so they can avoid foreclosure," Obama said.

Treasury officials said the plan could make affordable one-and-a-half trillion dollars in mortgage debt and deal with a large proportion of the six million foreclosures expected over the next four years.

The plan includes incentives for lenders to help debtors who cannot make monthly payments but also cannot sell their homes due to negative equity, to lower mortgage payments to no more than 31 percent of their income.

The plan will see the Treasury Department double its financial support to troubled mortgage finance giants Fannie Mae and Freddie Mac, to 200 billion dollars each, in an effort to stabilize the real estate sector.

A 75-billion-dollar initiative will target those who cannot afford to pay their mortgages but who have seen the price of their properties plunge so they cannot sell them and move into cheaper accommodation.

The initiative also aims to help families who put money down on homes and met their regular payments, yet cannot take advantage of refinancing made attractive by low mortgage rates because the value of their homes have sharply dropped.

US stock markets shrugged off the new housing plan, a day after the Dow Jones Industrial Average fell 3.79 percent on pessimism that the stimulus plan and new housing strategy would lead the economy out of recession.

On Wednesday, the Dow closed up 3.03 points (0.04 percent) to 7,555.63. The tech-heavy Nasdaq was down 2.69 points (0.18 percent) to 1,467.97.

Treasury Secretary Timothy Geithner told reporters here that the plan would not only awake the slumbering housing market, but would also help reignite the broader economy.

"By helping keep mortgage rates down, and helping reduce monthly payments, you are putting money in the hands of Americans, in that case it acts like stimulus," he said.

His comments came as Federal Reserve chairman Ben Bernanke said the sums being pumped into the economy may hold moderate inflationary risks in the long term.

"At some point, when credit markets and the economy have begun to recover, the Federal Reserve will have to moderate growth in the money supply and begin to raise the federal funds rate ... unwind some of its credit-easing programs and allow its balance sheet to shrink," he said in a speech to the National Press Club in Washington.

But for now, policy makers are still preoccupied with short-term fire-fighting.

Officials said the plan would not benefit irresponsible homeowners who took out bigger loans than they can afford, or banks that took dangerous risks or speculators who helped build the housing bubble.

"Let us be clear, housing has been a significant part of initiating the economic slide we are in and will be a key part of getting us out," said Housing and Urban Development Secretary Shaun Donovan.

"This is a smart targeted investment which can reach and help to make more affordable more than one-and-half-trillion dollars of mortgage debt."

"It is of a scale that can have a real impact."

The program, like other aspects of Obama's attempts to clean up the debt-laden finance industry, relies on lenders to thaw out credit.

I guess we shouldn't have paid our bills. Our reward for fiscal responsibility...nothing.

Then again, lots of foreclosures don't help home values either. Still, I am somewhat opposed to this

GOP: Mortgage Plan Rewards Banks for Wild Gambles

Thursday, February 19, 2009 7:45 PM

WASHINGTON – President Barack Obama's new 275-billion-dollar mortgage plan will start working "very, very quickly," his top housing official said Thursday, after Republicans mounted attacks on the initiative.

A day after Obama unveiled the new strategy in Arizona, one of the states worst-hit by the housing crisis which helped trigger the recession, debate flared over whether it would work and help turn around the economy.

"We believe we can get help into the hands of millions of families that need it very, very quickly," Housing and Urban Development Secretary Shaun Donovan told CNN.

Sheila Bair, who heads the Federal Deposit Insurance Corporation, also said the sweeping plan, which aims to lower monthly payments to help at-risk homeowners avoid foreclosures, could make a difference as early as next month. "I believe you'll start seeing a real impact in March, with meaningful, long term, sustainable modifications," Bair told ABC.

The visibility of top Obama officials on television and the detail offered when the plan was rolled out was significant.

Markets reacted poorly last week, when Treasury Secretary Timothy Geithner unveiled his bid to rescue the debt-laden finance industry, with analysts complaining the administration offered only general concepts and not details.

Even so, Republicans and other critics marshalled arguments against the housing plan, most of which can be put into practice without congressional approval, and which forms one aspect of Obama's huge government intervention in the economy.

Senator Richard Shelby, the top Republican on the Banking, Housing and Urban Affairs Committee complained the plan "appears to help those who least need it, and doesn't help those that do."

"The biggest outrage is that the President's plan actually will use taxpayer money to pay people to do what they are already supposed to do -- pay their mortgage," he said in a statement.

"It also uses taxpayer money to pay banks to do what they should already be doing -- modifying mortgages."

The administration contends that its plan will help up to nine million homeowners, and partly targets those who are not yet on the cusp of losing their homes but could easily fall into trouble.

A 75-billion-dollar portion of the program contains incentives to lenders to lower payments by at-risk homeowners to 31 percent of their income.

The two top Republicans in the House of Representatives, minority leader John Boehner and Minority Whip Eric Cantor, sent Obama a letter with a list of "unanswered questions."

They raised concerns about whether the plan will reward banks for taking wild gambles with risky mortgages and expressed concerns people who falsified their incomes to qualify for big loans would also benefit from a taxpayer bailout.

Asked on NBC what she would say to homeowners who had played by the rules, obtained loans they could afford and always made payments, Bair suggested the economic consequences of inaction were simply too grave.

"There are moral hazard issues here," she said.

"I think we need to understand that it is our collective economic interest to get these loans restructured where we can to keep them out of the housing market and reduce that downward pressure on home prices."

On top of the 75 billion dollars in incentives to lenders, the government will put up an additional 200 billion dollars to bolster efforts by federal lenders Fannie Mae and Freddie Mac to offer affordable mortgages and bring stability to the housing market.

The hope is that mortgage holders in good standing will be able to refinance their loans at lower interest rates now available.

Previously, such lenders had been unable to take this step because plunging house prices had left them with little equity in their homes.

The National Association of Realtors praised the move, saying it would "keep mortgage rates low for all buyers and could lead to even lower rates."

The president is also set to back legislation aimed at allowing bankruptcy judges to change the terms of mortgages and lower monthly payments -- a proposal that could face Republican opposition in Congress.

Obama warned when he unveiled the plan on Wednesday that without concerted action, the housing crisis could make economic recovery impossible.

"All of us are paying a price for this home mortgage crisis and all of us will pay an even steeper price if we allow this crisis to continue to deepen," he said.

Copyright 2009 Agence France Presse. All rights reserved.

I want a house I can't afford

LoL. I think we're all there Cat.

Quote :

Senator Richard Shelby, the top Republican on the Banking, Housing and Urban Affairs Committee complained the plan "appears to help those who least need it, and doesn't help those that do."

How fair is that?

Quote :

"The biggest outrage is that the President's plan actually will use taxpayer money to pay people to do what they are already supposed to do -- pay their mortgage," he said in a statement.

This is messed up... when some people have complained about why should the govt. help those who DON'T PAY THEIR MORTGAGES , but not help those who do, they were told to quit paying their mortgage so the government would pay it for them!

Quote :

"It also uses taxpayer money to pay banks to do what they should already be doing -- modifying mortgages."

This is why the BIG BANKS are in trouble, they would not help people by modifying their mortgages! Smaller, home town banks have been helping, and they are the ones that are refusing fed money!

Quote :

lower payments by at-risk homeowners to 31 percent of their income.

That is where it should have been to start with, if the house cost too much, and the payments were above this, the loan NEVER SHOULD HAVE BEEN MADE!

Quote :

They raised concerns about whether the plan will reward banks for taking wild gambles with risky mortgages and expressed concerns people who falsified their incomes to qualify for big loans would also benefit from a taxpayer bailout.

You bet this will happen!

Quote :

the government will put up an additional 200 billion dollars to bolster efforts by federal lenders Fannie Mae and Freddie Mac to offer affordable mortgages and bring stability to the housing market.

Congress and these two are the ones responsible to start with! And now they get rewarded with more money!

Quote :

The president is also set to back legislation aimed at allowing bankruptcy judges to change the terms of mortgages and lower monthly payments -- a proposal that could face Republican opposition in Congress.

So, what good is a contract then, if judges can now throw them out.

gdennis59 wrote:

LoL. I think we're all there Cat.

As in wanting a house we can't afford or living in one we can't afford.

Supposedly 90% of homeowners are caught up with their payments. The remaining 10% are a bunch of morons who deserve nothing but will get something. Since the economy is so shitty the liberal in me sees why this is theoretically a good idea, but I'm still pissed off because it's not a good idea. I'm all for big spending, but not on stupid shit like this.

In other news, California finally passed a budget today and all California State and University of California schools (that would obviously include my Alma mater, UCLA) are going to receive 10% less funding for the next 2 years. Why not raise taxes a bit? They raised the state income tax by 0.25% which means the average person will lose less than $100 as a result of this. Why not make that number higher and give the schools more money? Unlike shitty non-colleges, universities are actually worthy of receiving money since they serve a purpose whereas high schools and below often throw away tons of their money so that people who would have dropped out after the 10th grade instead wait until the 11th grade to drop out.

I may read that tomorrow since that's way too much for me right now.

The Universities should get help in the stimulus package passed last week.

GoGetEmTigers wrote:

The Universities should get help in the stimulus package passed last week.

They'll get extra federal money but I don't think that'll make up for the 10% cut they'll take from the state.

Back to the housing thing, all this economic stimulus stuff isn't why I voted for Obama. There's no magic cure for the economy. I think we've stimulated it enough. Work on something more important before the 2010 elections come around and the Democrats lose some of that majority...they certainly won't gain seats - that's not how politics work.

catbox_9 wrote:

I guess we shouldn't have paid our bills. Our reward for fiscal responsibility...nothing.

Then again, lots of foreclosures don't help home values either. Still, I am somewhat opposed to this

I guess I should not pay my bills either


Where is all this money gonna come from


I better enjoy 2009 as a Tigers Season Ticket Holder


Because if the Tigers go to the WS this year; Ilitch gonna jack those prices so high in 2010; i won't be able to go anymore

The rich liberals in Bloomfield Hills and Grosse Pointe don't care

They can afford to pay higher ticket prices because of Ilitch's greed and having to offset higher taxes under Obama's socialist regime


BUT I CAN"T


THANKS A LOT NOBAMA