It appears part of President Obama's housing plan is to force the bailout banks to cut mortgage payments. Btw, Obama is announcing the housing plan in Arizona, today. This could work, since these banks have cut lending, while still taking our tax payer's money to clean up their mismanagement mess.
While many are grasping the stimulus package, the housing mess is something everyone in this country fully understand. Some in congress felt Obama should have addressed this first, my take, it does not matter. Many things have been left for Obama to clean up by the Bush Administration, the housing mess is just one on the list to be addressed.
President Obama’s plan to reduce the flood of home foreclosures will include a mix of government inducements and new pressure on lenders to reduce monthly payments for borrowers at risk of losing their houses, according to people knowledgeable about the administration’s thinking.
The plan, to be announced Wednesday, is expected to include government subsidies for reducing a borrower’s interest rate, which a lender would have to match with its own money.
But officials cautioned that subsidies for lower interest rates would not in themselves help many troubled homeowners, because lenders were still likely to view many of those borrowers as bad risks and refuse to restructure their loans. As a result, they have been casting about for sticks as well as carrots to persuade the lenders to take part.
Exactly what kind of pressure Mr. Obama would bring to bear remains unclear. One possibility is a stepped-up effort to enact legislation that would give bankruptcy judges new power to restructure mortgages and reduce a borrower’s payments.
The part I emphasized above should be read with caution by every American. If we want out housing prices to stop falling, foreclosures to stop in our neighborhoods, short-sells to cease, the Obama Administration will have to give these lending institutions or bailout banks some type of incentive to restructure these loans, bad debt or toxic assets sitting on their books.
We don't like these banks right now. Many of us feel dumped on by Wall Street and their greed, I feel all of this, but if you want your home price to stabilize then a deal will have to be made. These banks, as of now, have no obligation to homeowners who got tricked into these funny mortgages, homeowners who got greedy flipping homes, or homeowners with their second or third vacation home who can not afford the payments now.
Folks, a deal will have to be cut and we in the end will have to take it.