Obama to Detail Housing Bailout Plan on Wednesday
So far, we’ve tackled the subprime lending crisis (and failed), the credit crisis (and failed), we’ve got a TARP, a Stimulus Package, Trillions of dollars in borrowed debt repayments as a result, and from what the Wall Street Journal tells us, we’ll learn about the President’s Housing Bailout Package – aka. Foreclosures R US, on Wednesday:
One likely element of the plan would reduce Americans' payments on troubled mortgages, people familiar with the discussions said late last week, possibly through a cut in the interest rate, the costs of which would be shared by the government and mortgage servicers. Government officials would make the reduction available to people who are at risk of defaulting. A loan-modification program at government-backed Fannie Mae and Freddie Mac currently calls for holding monthly housing-related payments to 38% of pretax income. The new formula is likely to be as low as about 31%, according to some people.
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In addition, the administration is expected to endorse a plan to allow judges to modify mortgages during bankruptcy proceedings in some circumstances, a move long opposed by the mortgage industry. And it could push measures that would remove some contractual obstacles that hinder mortgage servicers from modifying troubled loans. Pending any announcement, the country’s three largest mortgage lenders are putting a temporary halt on foreclosures.
Additionally, “David Axelrod said the plan that President Barack Obama plans to announce on Wednesday will aim to stem foreclosures, provide immediate help to homeowners who are ‘right on the edge’ of foreclosure, and ultimately help in ‘raising home values that have been plummeting.'”
Praised as a “good plan” from senior White House aides, Axelrod said that the plan’s foreclosure prevention aspects would cost somewhere on the level of $50 to $100 billion.
Will this become yet another in the line of failed attempts to stop the bleeding?
Only time will tell. Hopefully this Foreclosures ‘R Us plan at least makes a dent instead of bleeding taxpayers dry for generations to come.
Surprise me Mr. President, please!