As of today, more than five million more families (another 5% of all U.S. households) are now behind on their mortgages. And like the ones before them, risk foreclosure. This year and going forward, economists are predicting many more.
The government’s "Mortgage Modification Plan" from last year (a $75 billion taxpayer-financed effort) has been another Obama failure.
For the Obama administration, there is also the concern that millions of more foreclosures could delay or even reverse the economy’s supposed "tentative recovery" - the last thing it wants in an election year. Obama's had enough bad publicity already from all his other blunders.
Obama's latest "new-and-improved" program will allow owners to sell their homes for less than they owe, and will give them a little pocket change to help speed things up. ($1,500 for a "relocation allowance".)
This will be brokered with the banks, but the banks don't like this. Maybe they'd rather evict the families and allow the property to go into disrepair (further eroding the housing market) and collect the full amount through the government's guaranteed FHA insurance...funded by taxpayers just like Fannie Mae and Freddie Mac and TARP.
Taxpayer money will now be used to help soften the blow of people facing eviction from their homes by the banks. I would guess that many of these mortgages are A.R.M. loans, the kind that the banks have resisted renegotiating into regular 30-year conventional loans (and at a fair interest rate that the family could have better been able to afford.)
Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers (who have not been rescued by Obama's failed "loan modification program") to give up their homes through a process known as a "short sale".
(Contact the White House for details...)
Related posts:
Will we see homeless shantytowns in 2010?
http://tobuds.com/blogs/blog1.php/2010/03/08/the-great-depression-then-and-now-is-the
The Jobless and Suicides in 2010
http://tobuds.com/blogs/blog3.php/2010/03/07/out-of-work-buy-a-shotgun
The Great Depression: Then and Now - Is There a Difference?
http://tobuds.com/blogs/blog1.php/2010/03/08/the-great-depression-then-and-now-is-the
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