Obama’s Mortgage Assistance Plan Complete failure: More Foreclosures, Real Estate Set to Decline
Housing-Market / US Housing Jul 21, 2010 - 10:01 AM GMTBy: JD_Rosendahl
WASHINGTON — More than 40 percent of homeowners seeking help from the Obama administration's flagship effort to rescue those at risk of foreclosure have dropped out of the program.
The latest report on the program suggests foreclosures could rise in the second half of the year and weaken an ailing housing market.
About 530,000 borrowers have fallen out of the program as of last month, the Treasury Department said Tuesday. Nearly 1.3 million homeowners had enrolled since March 2009. - More than 40 percent of borrowers leave Obama mortgage-aid program
Interesting data above since the 2nd quarter of 2010 experienced the largest bulge in real estate foreclosures. Please see: Home Foreclosures Jump to Record Level in United States, No Big Surprise
Treasury officials say few of these borrowers will wind up in foreclosure. But many analysts are concerned that a new wave of foreclosures could greatly impact the struggling housing industry.
Treasury officials tow the party line and look like complete idiots. If they don’t get relief because they can’t afford their current mortgage, foreclosure is the only option. I have no idea how they came to their insane conclusion.
A major reason so many have fallen out of the program is the Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.
This one has to make everyone laugh. No kidding, that’s because they don’t have the income, that’s why they can’t afford their current mortgage. It’s not like they can’t afford their existing mortgage by just a little and could if payments were revamped lower. No, no, they can’t qualify for their existing mortgage and that’s why they can’t qualify for a new program. The Obama administration doesn’t understand simple math.
The Obama plan was designed to help people in financial trouble by lowering their monthly mortgage payments. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. The average monthly payment has been cut by about $500 on average.
This might be the dumbest part of the plan..........sheer stupidity. We are going to give someone who has failed to make loan payments and has entered into a real estate purchase and/or loan they had no business getting into in the first place, and reward them with a 2% interest rate on their loan.
As someone who has a credit score over 800 and has always paid all bills on time, I have to pay more than twice that interest rate if I want to finance a house? Where’s the risk/reward pricing in the interest rate? Why should I have to pay twice as much to buy over valued real estate while someone gets a below market rate to stay in something they don’t deserve to own? It’s completely ass backwards............stupid, stupid, stupid. If you can’t afford a home or loan you should be a renter. There’s nothing wrong with being a renter. In most cases it’s cheaper.
All the plan really did was push off foreclosures into the future, trading now for later. These foreclosures will happen on the back of the current bulge in real estate foreclosures and will exacerbate the real estate nightmare. Expect to see real estate values drop by the end of 2010 and into the first half of 2011. That decline will bring another wave of Americans into the "Upside Down Club". A free market economy where stupid government intervention rarely works, but politicians keep shoving it down our throats.
Though the program has been widely criticized for making only a small dent in the foreclosure crisis, administration officials defend their efforts. They say that the foreclosure prevention program has spurred changes in the mortgage industry, prodding lenders to make more significant cuts to borrowers' monthly payments than before the government effort started.
The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. But as of mid-May only $132 million has been spent out of a potential $75 billion, according to the Government Accountability Office.
Those numbers don’t lie, the program is a complete and utter failure. Administration officials again tow the party line and look like idiots. We should scrap insane programs like this and let supply and demand in the open market cure the situation. Yes, that will cause more real estate pain, but all we've done is push it out 1-2 years. Let’s stop wasting tax payer money so politicians can fill their agenda for re-election.
Obama mortgage assistance plan fails......................real estate set to decline!
Hope all is well.
By J.D. Rosendahl
www.roseysoutlook.blogspot.com
J.D. Rosendahl was a former stock broker/investment consultant (currently not licensed) before becoming a Commercial Banker for the past 14 years. He manages his family's wealth, helping them avoid the high tech bubble and the real estate bubble melt downs and preserving wealth.
© 2010 Copyright J.D. Rosendahl - All Rights Reserved
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