February 19, 2009

Trapped in a Sub Prime Mortgage? Obama Won't Save You

So says Rob Blake of the Mortgage Insiders Blog:

The Obama Housing Plan (known as ‘Homeowner Affordability and Stability Plan’ or ‘HASP’) is simply “more of the same” when it comes to helping those who President Obama admitted in his speech are responsible for over half of all foreclosures: the subprime mortgage borrower.

The subprime mortgage borrowers are the ones who actually need help, yet the Obama housing plan seems to focus on Fannie Mae and Freddie Mac refinances and stimulating the GSEs activity by keeping rates lower.

Fannie Mae and Freddie Mac did not originate nor do they insure subprime mortgage loans. So Obama’s plan focusing on the now nationalized GSEs maybe good for the government but it’s not any help for the subprime borrower.

Obama has a gift for making something that's really a bit of a half measure sound like its more than it is. I listened to his announcement on POTUS today. It sounded awesome, but the devil is in the details and the failure to address the sub prime borrowers out there makes this a half measure.

Also, I'm richly fed up with the bleating complaint I hear repeated ad nauseum on the cable shows that Obama's plan or indeed any plan that helps out mortgage holders faced with foreclosure is hurting those homeowners who pay their mortgage on time. If you are one of the people who object to Obama's plan for this reason, let me break it down for you.

You're wrong, and illogically so. Whether your next door neighbor's house is getting foreclosed on because they bought more house than they could really afford, or because they lost their job and couldn't get back on their feet before they were financially ruined, IT DOESN'T MATTER!. When their house gets taken by the bank, YOUR house takes a value hit too. And when millions of homes get foreclosed on, it rapidly and artificially deflates the value of the people who are still paying their mortgages. Those of us who are making our mortgage payments have a stake in this tide of foreclosures being stemmed, because its eroding the value of our homes too, and rapidly so. That being the case, I don't care if a few irresponsible persons catch a break.

Disagree? Have your say.