Finally a Real (Housing) Plan Indeed
The same mortgage lenders that candidate Barack Obama accused last year of causing the housing mess would get a windfall from President Obama’s government under his foreclosure rescue program.
The $75 billion plan announced Wednesday has the potential to be far more effective than past federal efforts to help struggling homeowners lower their mortgage payments and stay in their homes. But for that to happen, investors in complex mortgage securities have to agree to participate — something the government has so far failed miserably to persuade them to do.
More:
Last October in Reno, Nev., Obama vowed, “I won’t let banks and lenders off the hook when it was their greed and irresponsibility that got us into this mess.” But the outlines of his plan were an acknowledgment that he will need cooperation from firms that collect mortgage payments — known as loan servicers — if he intends to reach his goal of preventing up to 9 million foreclosures.
“The truth is that at the end of the day, loan modification remains voluntary, so the servicers need to see it as sufficient incentive to participate,” said Andrew Jakabovics of the Center for American Progress, who has worked with Obama’s team on housing issues.
Still, Jakabovics called some of the payments an “unnecessary windfall” that is “overly generous” — particularly since avoiding a costly foreclosure is a financial imperative for mortgage servicers anyway.
“You still have the very serious question of what kind of incentives you’re providing for what’s essentially bad behavior,” said David C. John, an analyst at the conservative Heritage Foundation.
True. Conservatives and moderates should watch Obama’s every move carefully. Democrats have already shown they are more than willing to reward bad behavior and to throw money away hoping that it will, somehow, someway, fix things.
Nonetheless, we’ve finally got a good, interesting and necessary bailout (lets call it that, for that’s what it is) to talk about. Will Obama work with Republicans this time around or will he, Nancy Pelosi and Harry Reid do what they did with the economic stimulus plan (namely, going it all alone)?
