I read this morning the details of Obama’s plan to help homeowners, and I was deeply bothered by some of his ideas. To follow his ideas point by point (my thoughts in italics):
- Help home owners who owe more than 80% of their home’s value to refinance and reduce their mortgage payments.
I’m of two minds on this one. I think there is a definite need to help people who are turning upside down in their mortgage, but I’m strongly opposed to helping people who put themselves in that position. For example, if I borrowed 125% of my home value, why should I be helped? _I_ put _myself_ in that situation. Where is the personal responsibility here?
- Create a $75BB fund to reduce monthly payments for at-risk borrowers by subsidizing interest rates.
Again, two minds. If they put themselves in that position, they should be responsible for it. We are responsible for our own personal economies and choices, and I fail to see why the government needs to play big brother here.
- Provide incentives for lenders to modify loans and help at-risk borrowers.
I’m more in favor of this as long as the incentives are minimal at best. I think we all need to recognize that there are three groups to blame for the mortgage mess: Government deregulation (started by Clinton by the way, not Bush), over-zealous lenders, and irresponsible borrowers. Everyone involved will and should pay a price for the damage done, and yes, that includes the borrowers.
- Create a $10BB fund to protect investors from further home price decline.
I’m absolutely opposed to this. Investment means risk. Just as I would never expect my 401(k) to be insured by the government, why would the government insure any other type of investment? In a true free market, the risk entailed by investing in real estate or the stock market would lead to an eventual balancing of the system on its own without government interference. Those willing to take the increased risk would be rewarded when the market flips. That’s how this works.
- Requiring all institutions that receive government funds to participate in a standardized loan modification program.
Um… I’m opposed to government intervention (read “bailout”), so in principle I’m opposed to this. However, if you as a bank accept money from the government as part of the bailout, the government should have the right to list stipulations just as I as a borrower have stipulations on loans I take out. Fair is fair.
- Allowing judges to modify mortgages during bankruptcy.
I don’t like this either. I’m not convinced that a judge is qualified to make real estate decisions. I’m also afraid of the two extremes in responses. There will certainly be some cases where the judge throws the mortgage out and others where the judge throws the borrower on the street. However, both the lender and the borrower agreed to the terms of the mortgage. Within that mortgage, there are existing rules and procedures governing a default on the loan. And it’s all legal. In my opinion, allowing judges to modify mortgages sets a dangerous precedence where the bench is not interpreting the law as it should, but rather manipulating the law. Scary.
- Provide increased backing for Fannie Mae and Freddie Mac.
I guess I don’t necessarily see a problem with this as long as the organizations are solvent. But if we are using Fannie and Freddie as a dumping ground for toxic debt….
But the thing that really worries me about this mortgage plan are the following statements made by Obama:
In the end, all of us are paying a price for this home mortgage crisis.
All of us will pay an even steeper price if we allow this crisis to deepen–a crisis which is unraveling homeownership, the middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit.
Sigh… No Mr. Obama. Every American will not benefit. Your actions as president, to date, have hurt me and my family far more than anything Bush ever did. Personally, I haven’t paid a penny for this mortgage crisis until you and others demanded on what is fast becoming a trillion dollars of stimulus that I, my children, and my children’s children will pay for.
Personally, I bought a home within my means that, in rough times, helped support me instead of ruining me. Personally, I have never spent more than 28% of my income on my home. I took responsibility for me and my family and supported us, but now I’m supporting everyone around me through a stimulus I don’t support or want.
The American Dream is still alive, Mr. Obama, but since when did the American Dream include home ownership? Let’s see… Liberty, life, the pursuit of happiness… Nope. No home ownership in the Constitution.
When you were elected, I offered my hand of support, and you still have my prayers. But, sir, you have already left me without any real hope of success. You are punishing me because I did it right, and that’s horribly wrong.
Admin Note: The information on Obama’s plan was pulled from the following CNN article located here.