It’s beginning to look a lot like Christmas—in July–for distressed homeowners. IF–if–a rescue plan just voted on in the Senate by a vote of 83-9 can avoid a Bush veto and be restructured to please the White House, the Congress, the lenders and, oh yes, the homeowners! Experts making educated guesses think all that is not likely to happen till July.
So, what does the current measure offer?
What it comes down to is that borrowers whose homes are in danger of foreclosure would be eligible for provisions of the plan provided the holders of their mortgages are okay with taking a huge loss by allowing them to refinance at a lower amount.
Also, should the homeowner eventually sell the property, they would share some of any profits made with the folks in Washington.
So, is everyone happy?
Silly question. The answer is, no. Some Republicans say the measure is a sell out–this while members of the House of Representatives Black Caucus claim the plan has “glaring omissions.”
Clearly, something will and has to be done. What began as a subprime mortgage mess has spread so far and wide and deep within the American economy—world economy! And, this, of course, is a key election year with both Barack Obama and John McCain having to takes sides on how to dig the country out of the mortgage/credit debacle.
The problem is, in a haste to fashion some plan that might ease the fears of voters before November, Congress may come up with something that makes matters worse. Now I know what you are thinking. You’re thinking, “Congress. Make matters worse? Come on” But there you have it. It could, if it is bullied into a quick fix that shows its faults after the presidential election has come and, we can only hope, gone.
Unknown is how long any rescue plan might take before it really sinks in? Restructuring a mortgage, even in the best of times, is no fun task. Restructuring a mortgage in the middle of a crisis and using an untested Congressional rescue plan is bound to be a ton of laughs!