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Obama Housing Plan ‘Aims Straight at the Heartland’ |
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As many as 9 million homeowners who are facing foreclosure or struggling with skyrocketing monthly mortgage payments could save their homes under the terms of a home rescue plan President Obama unveiled yesterday.
When the Bush economy began to tank more than a year ago with banks failing and jobs vanishing, foreclosure signs and abandoned houses began sprouting in working and middle class and even up-scale neighborhoods around the nation. The AFL-CIO first called for a homeowners’ lifeline in late 2007. But the Bush administration preferred to bailout Wall Street instead of throwing a lifeline to Main Street. Says AFL-CIO President John Sweeney:
The swift action by the Obama administration to address the housing crisis is a welcome and refreshing change.
For more than a year, the Bush administration ignored calls from the AFL-CIO and others to address a coming foreclosure tsunami. Tragically, in the months that followed, the deepening housing debacle turned millions of families’ lives upside down and strengthened its chokehold on our economy
Nearly one in 10 mortgagers are either delinquent or in foreclosure and economists predict that without an initiative to help troubled homeowners, as many as 8 million homes could fall into foreclosure during the next four years. Said Obama in announcing the $275 billion housing plan:
Ts plan will not save every home, but will give millions of families facing financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help shore up prices for everyone.
The plan would help some 4 million homeowners who are now at risk of losing their homes. It will provide incentives to lenders to change the terms of those loans to make them more affordable.
It also would help some 5 million homeowners who are current with their payments but have seen their monthly payments soar because of new high interest rates on their adjustable rate mortgages that threaten their ability to stay current. They have been unable to refinance because their home values have plunged, leaving them without enough equity in their homes to qualify for lower rate loans. The plan would allow them to refinance through Fannie Mae or Freddie Mac, which under the initiative received about $200 billion to increase available credit.
Another major provision of the Obama housing program would allow bankruptcy judges to change the terms of mortgages and reduce monthly payments to allow homeowners who are in bankruptcy to stay in their homes. But Congress must approve changes in bankruptcy laws before that can occur. Says Sweeney:
The strong plan from the administration correctly includes changing the bankruptcy laws to allow judges to modify the mortgages of distressed homeowners, including reducing the principal of these loans to the property’s current market value.
The crisis could not be more dire. An estimated eight million homes will fall into foreclosure over the next four years. Bankruptcy reform is a critical piece of the solution for working men and women.
Financial columnist Felix Salmon, at Conde Nast’s Portfolio.com, says
this plan aims straight at the heartland, where it really matters. It’s a good start.
Barbara Sard, the director of housing policy at the Center on Budget and Policy Priorities (CBPP), told the American Prospect ”the plan looks very good in a number of respects” and calls the various government incentives aimed at encouraging financial institutions to modify loan terms “smart” and “clever.”
Former Labor Secretary Robert Reich says the home rescue plan is imperative to helping stabilize the nation’s economy:
We’re in an economic crisis. And a failure to put millions of homeowners on a firmer footing would send more shock waves throughout the economy. Not only will more people lose their homes—surrounding homes will lose value as well, as neighborhoods become blighted with more empty houses. And lenders, worried that even more borrowers can’t repay loans, will stop making additional ones.
Bertha Lewis, CEO of the community activist group ACORN, says the housing rescue plan
will finally put the full power of the federal government behind homeowners trying to pay the mortgage and neighborhoods reeling from the crisis. It is imperative that all lenders participate and agree to higher standards, and that Congress quickly pass the bankruptcy legislation.
But what kind of opposition does the plan face in Congress?
The Center for American Progress (CAP) notes that even before Obama’s plan was released, congressional Republicans were gearing up for another just say “No” campaign like the one staged against the economic recovery package. Of course Republicans complained loudly that the recovery package didn’t do enough for homeowners. Logic and consistency has never been their strong suit.
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Thank God, for Pres. Obama.
Who and what are these Republicans, anyway? Answer: Bunch of phonies. In the coming months and years when the economy gets restored, these Republicans will be exposed exatly for what they are.
I’m glad to see something being done, but I think we are missing the big picture: The criminals of Wall Street that caused our economic crisis are still on their thrones.
I remember the first gulf war. The worry was that Saddam Hussein would gain control of the world’s oil supply and destroy the economies of the world by controlling the price.
Well, thanks to Wall Street speculators, the price of oil reached record levels in 2008 and caused people to quit buying trucks and suvs. This caused massive downturns at the automakers and mass layoffs. Job loss caused more job loss in a downward spiral.
The housing crisis was caused by the same Wall Street rulers. Predatory lending and the creation of complex derivitives of toxic debt created the financial crisis. They only quit speculating on oil when faced with margin calls because of their bad loan business.
When 9/11 occurred, the worry was that our economy would be disrupted by the attacks. Bush told us to “keep shoping”.
The point here is that these Wall Street criminals have done what we feared the terrorists would do: Destroy our economy and our way of life. They have damaged our nation’s economy and the lives of our people in a multitude of ways.
As usual though, nothing will happen to them. They will be coddled and protected by their politicians and their lavish lifestyles will remain intact while You and I will lose our jobs and we might get to keep a roof over our head.
By the way, these are the same people who love to outsource our jobs to slave labor countries like China.
The final point is this: When workers lose their jobs to slave labor or lose their homes, the economy is functioning normally, according to the elitists. When the elite get in trouble, they are too big too fail and we must bail them out with no hope of getting the money back. Until we address the problem at the root, we’ll have more of the same economic conditions.
The article (link below) provides more critical and realistic view of Obama’s Housing Plan. A brief economic history explains how the current economic crises came about. Here is a link to the full article:
http://www.wsws.org/articles/2009/feb2009/pers-f21.shtml
Obama’s housing plan and the American ruling class
21 February 2009
Tom Eley
US President Barack Obama’s Homeowner Affordability and Stability Plan (HASP), announced Wednesday, will do little to alleviate the enormous financial pressures on working class families caused by plummeting home prices.
It does not reduce the outstanding debt, or principal, that homeowners owe the banks, which for millions of Americans now surpasses the value of their homes. Even in its modest stated aims—to reduce monthly mortgage loan payments for a portion of embattled homeowners—HASP will in most cases depend on the voluntary participation of private banks. It does nothing for the hundreds of thousands of renters thrown out onto the streets by evictions and foreclosures against their landlords.
While complete details of the plan for loan modifications from private banks will not be released until next month, it is already clear that there will be innumerable hurdles designed to make it very difficult for homeowners to qualify. Anyone who is deemed able to “afford” their present rates will not qualify. If a mortgage company decides that refinancing a loan will cost them more than sending the house into foreclosure, moreover, they will be free to deny refinancing.
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The crisis in the American housing market in fact represents the intersection of powerful objective processes that have been ripening for more than 30 years.
One has been the long-term erosion in the living standards of the working class. Since the 1970s, social inequality has increased and wages have stagnated, in spite of increased worker productivity……
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The resolution of the housing crisis, like the larger economic crisis of which it is part and parcel, is not simply a technical matter. It is a class question. The working class must articulate and fight for its own program.
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