The data for April and May prove that Obama’s plan to rescue those facing mortgage foreclosure is a dismal failure. Since this issue was the cornerstone of his economic program during the campaign, its abject failure is a significant setback for the Administration’s economic plan.
In the month ending on May 26th, 464,983 foreclosures of subprime and Alt-A mortgages (out of a universe of 3.2 million studied). So 15% of all subprime mortgages were foreclosed in May! Only 19,041 — a paltry 6% — were modified during this period. And of those modified, only 11,200 involved any reduction in the monthly payments! Only 12% involved any write-off of interest, fees, or principal and 27% of the loan modifications actually increased the monthly payments due.
Alan M. White of the Valparaiso Law School, who conducted the study, noted that the data showed that “the Administration’s plan to stimulate mortgage modifications does not seen to have had much effect yet, at least in this market segment” [i.e. subprimes].
And the trend lines are all bad:
• The number of loan modifications dropped 11% from April to May.
• The ratio of foreclosure losses to modification write downs (the amount lost in foreclosure: the amount rescued by write-downs) doubled in the past month. For every dollar saved in modifications, $150 was lost in foreclosure.
When Obama launched his mortgage rescue plan, he promised that it would help five million households. So far, he is about 4,969,000 short of his goal!!
When will the subprime foreclosures stop? In about a year when all of these unfortunate people have lost their homes!
Why is Obama’s plan falling so far short of the mark? The fault is its own restrictions. You cannot get a loan modification if:
• You have lost your job
• You owe more than 5% above what your house is worth
• You are already in default
• You have not yet missed at least one payment
• Your lender does not want to participate
• Your mortgage is not one of the half of all mortgages insured or owned by Fannie Mae or Freddie Mac
• The reworked mortgage payment would come to more than 31% of your income
• Your mortgage is over $759,000
• The home is not your primary residence
The number of beleaguered homeowners who can slip through the eye of this particular needle and qualify for a mortgage modification is tiny.
(We discuss failure of Obama’s mortgage relief program at length in our new book Catastrophe, due out on June 23rd. Pre-orders of signed books are available at DickMorris.com)
And yet there is an easy remedy at hand. Obama should simply say, as they did in Sweden, that the government will simply buy the distressed mortgages from the banks and adjust the payments to make them possible for the homeowners. Then, when the economy comes back, the homeowners could either pay back the government what they owe for the postponed payments or sell the house and repay the feds from the proceeds. If they won’t do either, the feds could then seize the house and get their money back. Cost to the taxpayers: zero. In f act, they would likely make a profit.
Why won’t Obama do this? It’s because a Democratic administration cannot throw people out of their homes. Better to let them default and make the big, bad bank do the dirty work.
All these facts underscore how cynical was Obama’s campaign in predicating so much of its economic message on an appeal to help those facing foreclosure. You don’t hear Obama talk about foreclosures any more do you? That’s because he knows he has no solution and that he won’t offer any.
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I have an even better idea. Those who don’t work, don’t eat! And they don’t have a roof over their heads! –Unless others CHOOSE to help them out!
Hey, now THAT’S a GREAT idea!
People who are close to those who claim to be in need, are going to know best if they are truly in need or if they are just loafers and or idiots that got themselves in over their heads and are in need of learning a lesson!
Please don’t get me wrong. If people are receiving, that, which they put into, like Social Security or unemployment, such is a whole other matter.
I am also fine with government incentive programs, such as scholarships, etc. This is because the government takes our money, via taxes. We need a way that we can get something back for our children. Plus the students are working, at and for, that, which they are receiving. — I do, however, believe that someone in the household should prove to have paid taxes for a significant amount of the student’s upbringing if he/she is going to receive anything back. This is the same rule that applies for tax-credits.
–Ideally, the government would stop over-taxing us to begin with, so that we won’t need to jump through hoops to get something back. But until then, it is a way to get something back.
My gripe is with those who want free handouts, paid for by those who don’t. Paying for someone else’s mortgage through my taxes, angers me greatly. I don’t care how the government figures it out.
Debra J.M. Smith
of
www.InformingChristians.com
[…] dickmorris.com nhiemstra 2:31 pm via: dickmorris […]
[…] In the month ending on May 26th, 464,983 foreclosures of subprime and Alt-A mortgages (out of a universe of 3.2 million studied). So 15% of all subprime mortgages were foreclosed in May! Only 19,041 — a paltry 6% — were modified during this period. And of those modified, only 11,200 involved any reduction in the monthly payments! Only 12% involved any write-off of interest, fees, or principal and 27% of the loan modifications actually increased the monthly payments due. No TweetBacks yet. (Be the first to Tweet this post) […]
[…] In the month ending on May 26th, 464,983 foreclosures of subprime and Alt-A mortgages (out of a universe of 3.2 million studied). So 15% of all subprime mortgages were foreclosed in May! Only 19,041 — a paltry 6% — were modified during this period. And of those modified, only 11,200 involved any reduction in the monthly payments! Only 12% involved any write-off of interest, fees, or principal and 27% of the loan modifications actually increased the monthly payments due. Read the rest here… […]
The Seventh President of the United States, Andrew Jackson, once said that the country should be run by average American citizens. He was the only US President not to run a deficit.
Personally I am fed up with bureaucrats like Ted Kennedy who think they know what is best for average Americans when in fact they are so far removed from the mainstream as not to be relevant.
Bottom line for most Americans is their pocket book. There is 300 trillion dollars worth of debt in this country and until that is reduced; no amount of spending will help. If a person does not have the money, they will not purchase the goods and services.
The benefit of this government spending should go to the taxpayers. I say index each mortgage by 0.75, then refinance the loan at 4 to 5 % and if the owners can qualify give them the reduced mortgage. If they can’t afford it, then they should not be in the home. Have the government buy the 25% and distribute it to the states to reduce property taxes which sometimes doubles the mortgage payment. If the house is paid for, then provide a tax reduction to the owners. That would free up hundreds of dollars a month for spending.
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[…] way Bush did, you’ll have a point. Until then, the question is moot. If has already happened. OBAMA’S MORTGAGE RESCUE PLAN IS A FAILURE Obama’s Failed Diplomatic Game Learning from Chicago’s failed Olympic bid, England won’t rely on […]