Tilted
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Housing Plan: $75 Billion to Help 9 Million Families
Some of the details of this plan are being leaked out ahead of the formal unveiling. I understand the need to do something, but once again this is sounding like more of the same junk - rewarding poor decisions to the detriment of good decisions.
At the very least, if we are going to be providing funds to banks to allow them to forgive principal on mortgages that are underwater, we better damn well have recapture provisions whereby we get those funds back if and when the home values go back up. Otherwise, it's just an out and out government handout to those who can demonstrate that they made sufficiently large mistakes. Also, how are we going to create a home valuing mechanism that doesn't open us up to rampant fraud and the outright theft of our money?
Many of these homes are underwater because people continually refinanced them, at values they should have understood were unjustifiable, in order to enjoy the money - pools, remodeling, steak dinners, vacations, whatever. Effectively they will have gamed the system, and the people who didn't will have to pay the price for it. I don't fault them for gaming the system, I fault us if we make the system such that they can game it.
It looks like we are also going to further capitalize Fannie Mae and Freddie Mac, presumably allowing them to continue to facilitate the processes whereby a lot of this problem was created.
Some of the details of this plan are being leaked out ahead of the formal unveiling. I understand the need to do something, but once again this is sounding like more of the same junk - rewarding poor decisions to the detriment of good decisions.
At the very least, if we are going to be providing funds to banks to allow them to forgive principal on mortgages that are underwater, we better damn well have recapture provisions whereby we get those funds back if and when the home values go back up. Otherwise, it's just an out and out government handout to those who can demonstrate that they made sufficiently large mistakes. Also, how are we going to create a home valuing mechanism that doesn't open us up to rampant fraud and the outright theft of our money?
Many of these homes are underwater because people continually refinanced them, at values they should have understood were unjustifiable, in order to enjoy the money - pools, remodeling, steak dinners, vacations, whatever. Effectively they will have gamed the system, and the people who didn't will have to pay the price for it. I don't fault them for gaming the system, I fault us if we make the system such that they can game it.
It looks like we are also going to further capitalize Fannie Mae and Freddie Mac, presumably allowing them to continue to facilitate the processes whereby a lot of this problem was created.