Did you know Obama's economic plans have their own logo?(The logo is a failure too)
President Obama has spent so much time attacking mortgage companies that you would think he might be some kind of expert on the housing market. Not so much, apparently:
The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.
Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.
As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.
In other words, homeowners have been given false hope that they can hold onto their house, but they wind up throwing more money at a problem that is not likely to be fixed. In the end, their money is wasted, their credit score is ruined and their home is gone.
Source: NY Times via HotAir
CNNMoney was on this story over a week ago and they went to great lengths to blame homeowners instead of the flawed plan:
Most troubled homeowners view President Obama's foreclosure rescue plan as a way out of their financial troubles.
But many don't realize that entering a trial mortgage modification can actually hurt their credit.
CNNMoney recently received a flood of e-mails from readers complaining about the impact of trial modifications on their credit reports.
To be sure, many people who apply for the president's plan are already delinquent in their mortgage payments, which wrecks their credit backgrounds. And obtaining a trial modification should affect borrowers' scores because it shows they cannot meet their original obligation, experts said.
Source: CNN Money
Well, yeah, that's true and it makes perfect sense, but that was ALWAYS going to be the case. Obama either didn't understand that fact or he simply didn't care. In fact, the administration announce - on Christmas Eve, when nobody was paying attention - that they have eliminated the bailout caps on Fannie Mae and Freddy Mac. Joe Weisenthal at BusinessInsider.com posits several possible reasons for this announcement, including:
What the Treasury’s lifting of the bailout caps on Fannie and Freddie might portend for 2010
1.) Revisions to the flagging Homeowner Affordable Housing Program (HAMP). Any changes will likely increase near term bailout costs to Fannie and Freddie if HAMP’s current reliance on interest reduction is replaced in part by principal reduction. The losses associated with a modification of a loan using an interest rate reduction are spread out over time while a modification using principal reduction results in taking a more immediate loss.
2. Fannie and Freddie taking on a greater role in the near term to support their own mortgage backed securities (MBS). Now that the Treasury’s and the Federal Reserve’s own support programs are in the process of winding down, the administration’s actions may be preparing Fannie and Freddie as the vehicles for continuing this support. The Treasury’s December 24, 2009 announcement raises the portfolio limits to $900 billion each, thereby providing Fannie and Freddie with the ability on a combined basis to increase their portfolios by a total of $275 billion. At the current rate of the Fed’s MBS purchases, this new capacity would last about 4-5 months.
Source: Business Insider
Is it starting to make sense? It's another one of Chef Barry's socialist omelettes with a side order of incompetence. Back to the NY Times article:
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.
“The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis,” said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. “We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway.
Source: NY Times via HotAir
In the end, there is no way Obama takes responsibility for this massive failure. He will blame the "fat cats" and he will use his own failed plan as an excuse for another, bigger plan.
Ed Morrissey at HotAir puts it in perspective:
Just like Cash for Clunkers and the homebuying credit, the Obama administration did nothing but kick the can down the road. Rather than addressing the real problems of the economy, Obama attempted to mask the symptoms. Even the New York Times has noticed that Obamanomics is nothing more than smoke and mirrors, only really, really expensive smoke and mirrors. In the end, we will all pay.
Source: HotAir
