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.

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!

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Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded BiggerPockets.com when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 600,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.


  1. The ideas mentioned actually sound reasonable. The big question that he is going to need to answer is whether people who aren’t in trouble will also see some benefit. You can’t bail out a few million without giving the other hundred million the opportunity to get some savings too. Otherwise, he’ll see a revolt.

  2. Call me a pessimist but I think this plan is going to work just like the others. I plan on applying at AIG or Wells Fargo, at least if I lose my home, I could get a killer vacation out of this entire ordeal.

  3. I agree with Dave, it does seem a little unfair if only the people who are bad with their money get a handout. But then again you have to look at the bigger picture too, this is for the financial security of the whole world. If we can’t find ways to turn this mess around then things are going to get very dark.

  4. It definitely seems unfair that only the people who didn’t handle their finances appropriately get help. It looks to me like the only benefit that the bill payers will be getting is the possibly improved economy and financial security of the country like Dave stated which of course benefits all. There should be something for the bill payers though as it sends the wrong message.

  5. Its the moral ideals like Kelly why we are where we are. You want to take money and go on a vacation when the money is meant for those that are in need. And no this idea will not work. At most it will prolong the crisis that families are in. Kelly the most you might get is $8000. Will that keep you in your house? I doubt it. Oh yeah I forgot you can go to Hawaii and have a killer vacation and visit Hussein Obama’s stomping grounds.

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