Today the Obama Administration dipped its big toe into the foreclosure quagmire by announcing a number of moves that will try to keep people in their homes who still have jobs or income. Therefore, residents experiencing Florida foreclosure will be able to modify their loans, refinance, or with Congressional approval, modify the amount owed to the banks in bankruptcy.
President Obama’s plan is real and politically, a good start, but the announcements today will most likely not fully abate the real problem .
The residential real estate market lost $8,000,000,000,000. Yes. $8 trillion in equity! Caused by lots of irresponsible borrowing, lending and speculating. There is enough blame to go around here. So lets stop playing the blame game.
The government’s plan is, of course, trying to reward the homeowners that have continued to make their monthly payments even if they are under water. That is a great thing, even admirable. It addresses the whole moral hazard issue of not rewarding the rascals – like the government initially did with Wall Street. But $75 billion is less than 10 percent of the amount of the problem. I am not saying that the Obama Administration should do anything different, just that it’s amazing that this wound has taken until NOW to be tended to! Now, that does not mean that the patient is getting better . Just maybe… NOT ANY worse.
I still say it will be the first time homebuyers, the bottom fishers, and the people who keep paying their loans that will truly bail out the economy. So thank you President Obama on behalf of my friends in the title business and the refinance industry for putting life back into our livelihoods.
What this all means for the guy who lost his job and really can’t afford his old lifestyle I am not sure. Actually I am sure; it means too little too late.
We will be addressing the foreclosure rescue plan and how it can help YOU at our monthly foreclosure workshops. The first one is March 5th 2009. For more information read our foreclosure workshop press release.