12:15 PM ET, We Get the Obama Housing Plan
Here’s the cliffnotes version of what to know and expect from President Barack Obama’s unveiling of a $50-to-$100 billion foreclosure mitigation program.
First have a look at a 10 minute MSNBC “Hardball” analysis on the massive issues the new Administration is juggling.
The Lennon-McCartney of economics bloggers, Calculated Risk and The Big Picture, each bring pithy, cut-to-the-chase commentary to bear on the details of the housing plan that have come to light.
Here’s Calculated Risk riffing off the New York Times’ David Leonhardt preview of suspected elements of Obama’s strategy to stem the tide of failing homeownerships.
The details of the housing bailout should be available tomorrow (who qualifies, etc.). I’m not sure why the government is bailing speculators (aka homeowners) who bought homes they really couldn’t afford during the housing bubble.
That rhetorical indirect question got more than 250 responses from CR’s audience … after 1:49 a.m. ET.
Now, The Big Picture doesn’t want to leave much to his readers’ own aptitude when it comes to understanding what’s at stake in today’s announcement. So Barry Ritholtz, The Big Picture incarnate, explains it all to us.
Today at 12:15 am, we shall learn of the Obama administration’s new housing plan. I suspect it will have many of the same doomed features as all the other misguided housing plans floating around.
Before getting to those specifics, let’s revisit and recognize several truths:
• Home prices remain elevated;
• Artificially propping up prices is counter-productive;
• Home owers (No equity, 100%+ debt) who are in houses they cannot afford are going to have to move to homes or apartments they can afford;
• Foreclosures/REOs are often costly to banks; The lenders that made these bad loans to unqualified borrowers will suffer write-downs;
• It is not the responsibility of Taxpayers to bailout borrowers who are in over their heads, or lenders that made bad loans.
What are we likely to see from the White House today? I expect to see an over emphasis at stopping foreclosures; a reliance on foreclosure moratoriums; Involuntary loan modifications a/k/a cramdowns; and last, Interest rate deductions;
We would be much better off if we did 3 things:
Recognize that falling prices will help return the Housing market and the economy back to normalcy. On the basis of either median income to median home price, or Housing value as a percentage of GDP, homes remains significantly overpriced, and need to continue come down in cost; Identify those people who cannot afford to be in their houses (Underwater, overpriced, too little income) and help them move into more affordable housing (rental or purchased); Keeping people in homes they cannot afford is counter-productive Identify those people who can afford to stay in their homes with a modicum of loan mods/work out. These are the best targets for legitimate foreclosure avoidance.
Still, like it or not, as National Community Reinvestment Center president and ceo John Taylor said on CNBC this a.m., “all of us have a dog in this hunt” to stop foreclosures.
There’s a fork in the road, and there’s no choice but to take it.
See you on CNBC at 12:15 pm, as the President delivers the framework to mitigate what some estimate to be a 10 million home foreclosure problem if nothing effective is done. Yes, and we’ll all be watching the stock market fever chart in the background as he speaks.
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Bank of America does not want to work with the public. I received my modification from BOA and it was higher then my last bill and they added the missed payments to the back of the loan which now makes my underwater (upside down) house sink to the bottom of the Ocean. This 30 year old house that needs repair that will sell for around 60 thousand as a fixer upper is now on paper value at BOA it is now at 145 thousand. Now for 145 thousand here in Casa Grande AZ would be a 5 bed room house with a 3 car garage. Something is wrong here.