Coming Tomorrow: A Housing Solution?
Tomorrow, President Obama will announce (yet again) how he will save the country.
If expectations weren’t already high enough, the 44th President will have to explain just how he intends to stop and reverse the massive housing whirlpool that has been sucking the nation into an ever-expanding black hole of foreclosures, debt and homelessness.
The plan is expected to include a combined effort of government inducements to stall foreclosures and pressure on lenders to reduce mortgage payments. The exact type of “pressure” cited by government higher-ups is still unclear. Government subsidies on lower interest rates are a possibility, though one that may prove useless if the targeted borrowers are still considered risks and therefore still denied restructured loans.
Another option is to bestow new power upon bankruptcy judges to help increase borrowers’ bargaining power in restructuring mortgages and reducing payments—another possibility with drawbacks. Banks are concerned the new judiciary powers will keep investors from financing mortgages if they know the terms can be altered at a whim. Even so, some have agreed to halt foreclosures until Obama’s housing measures are officially worked out.
Other changes may include a 10 percent mortgage tax credit for homeowners who don’t itemize their taxes, standardized loan forms and other loan-modification efforts—though these methods have been criticized for their potential to either not do enough or destabilize the marketplace. Tomorrow’s announcement should reveal the real inner workings of the rescue effort.
Obama’s senior advisor David Axelrod insists spending between $50 and 100 billion is a necessary step (or a necessary evil) in light of the housing crisis. Foreclosure filings surpassed the all-time high of 3 million last year, and without government interference, industry insiders are concerned it will only get worse—some estimating that it will climb to as much as 10 million in the coming years.
In this case, the President may need more than a lifesaver.
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Urban Sociologist on Thu, Feb 19, 2009 at 9:47am
I would love to blame our last president for all our economic crisis but I can’t. As consumers we need to take responsibility for our actions. This housing crisis was caused by morgage brokers, law makers, and ourselves. I know personally people who have gotten housing loans who can not afford it , and now are going into foreclosure. Obama is trying to fix it by putting pressure on lenders, but what good is that going to do if people are not going to learn from their mistakes. If a person’s income can not support their bills then maybe they should not own a house.