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[...] Obama and his Making Homes Affordable Program… a real loser of an idea that I posted on back in mid February. This brainstrom was not a creature of legislation, but of the omnipotent Treasury department, and [...]

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The following comes directly from the Executive Summary of Obama’s mentioned in the article. Are there any doubts remaining as to whether Obama’s overall plan is to reinflate the housing and credit bubbles?

Read for yourself:

Increasing The Size of Mortgage Portfolios: To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSEs’ retained mortgage portfolios allowed under the agreements — by $50 billion to $900 billion — along with corresponding increases in the allowable debt outstanding.

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$900 billion MORE debt coverage, certain to be guaranteed by the benevolent taxpayer!?!? Better get your butt-cream ready!

BOHICA!!

Jeff V

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>>The pols are focusing on ways to keep the housing prices artifically high so that there will not be a loss for those that either purchased during the boom, or sucked out all their equity during the boom.>>

And don’t forget real estate taxes. In California, at least, these supply the funds to the State – although assessed and collected by the Counties – which are sent back to the Counties to pay for schools. The reason it’s done this way in California is that some districts were wealthier than others, and had better schools. In order to make funding of all schools equal, the State collects the taxes from the Counties and then pays each school district on a per pupil per day basis. If real estate values fall, owners either pay lower prices for a new house, or a present owner can ask for a revaluation to reflect falling prices. If the appraisal is lower, then either the tax rate has to be raised, or the home owner will pay lower taxes which means less money for the State – and County – to spend. I don’t know about other states, but in California, lower real estate values will put a real crimp in the spending programs of both local and State governments.

And we all know how readily politicians adapt to less money coming into the coffers…

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ruaqtpi2: Obama is trying to reinflate the bubble, instead of dealing with the structural weaknesses of the credit/lending system as a whole.

Exactly. The pols are focusing on ways to keep the housing prices artifically high so that there will not be a loss for those that either purchased during the boom, or sucked out all their equity during the boom. There is no way back to that status, nor should there be. It was unhealthy to begin with, and remains an unhealthy goal.

I agree with most of what you say, ruaqtpi2. I will tell you that, INRE your #2 comment:

If (BIG IF) the government still sees a need to offer incentives and give aid to home owners in default, the homeowners should give up their right to make any profit on the sales of the affected homes, or have an option to repay the assistance monies (plus applicable interest) at the time of sale (or within a reasonable time frame – maybe 10 or 15 years).

I will tell you this already exists on FHA mortgages… called a HUD Partial Claim. If a borrowers is in the arrears more than four months, they can get a one time interest free loan with no monthly payments for up to 12 months of their mortgage. The criteria includes that it has to be their primary residence, and whatever hardship made them stop payments (medical or job loss, etal) must be cured and once this loan brings up to current status, they must be able to make the payments.

This Partial Claim stays there as a 2nd lien with no payments necessary, nor interest charged. It must be paid off when the home sells, of if the owner changes it’s use to a rental, and no longer uses it as the primary residence.

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Obama is trying to reinflate the bubble, instead of dealing with the structural weaknesses of the credit/lending system as a whole. The market sees through the scam, which is why the stock market indexes (or indices, if you prefer) keeps nosediving with each new program proclamation (by the way, where was the 5-day review period for this new $75 billion package? Certainly this doesn’t qualify as an emergency, does it?)

My idea of a plan to let the market recover:

1) Bring the value of all toxic assets to the surface, but not in a “Bad Bank” where taxpayers subsidize speculation. The only way to move forward is for these assets to seek their own price, at which point they will function as normal investment vehicles. I don’t care if banks have to take a loss; let it be a tax write-off, if necessary, but realize that the loss of tax revenues MUST be offset, preferably by cuts to non-essential spending programs. Also, let the CEOs, directors, and other senior management at these banks and investment firms take their lumps, even if it means seizing their assets. Why should they get positive “performance based” compensation for such poor performance? The average employee would get canned for much less significant infractions. The executives who were responsible for this boondoggle should be satisfied with not being indicted for their gross misconduct (not that I’d be against such legal actions, except it would almost certainly mean that someone else would take the fall.)

2) Allow banks to renegotiate terms of existing mortgages as they see fit, on a case by case basis. If (BIG IF) the government still sees a need to offer incentives and give aid to home owners in default, the homeowners should give up their right to make any profit on the sales of the affected homes, or have an option to repay the assistance monies (plus applicable interest) at the time of sale (or within a reasonable time frame – maybe 10 or 15 years).

3) Instead of offering tax incentives for companies to bring jobs back to the US, put an excise tax on the value of goods and services added by operations offshore. Most large corporations already take advantage of huge tax breaks offered by local, state, and federal governments. Along related lines, we also need to review NAFTA and similar legislation; these so-called “free trade” agreements were simply a way to reduce costs to a minimum by relying on comparative advantages obtained by paying lowest cost labor/production/regulatory costs offshore.

4) Revisit the rules for issuing H1-B and other work visas to keep companies from using “imported talent” as a method for reducing labor costs at the expense of American jobs. When unemployment is low, H1-B and other programs may be valuable for bringing into a company talent that is otherwise unavailable in the population of unemployed Americans. Nowadays, the “inability” to find qualified candidates is mostly an excuse to replace American workers with lower-cost foreign workers.

5) Work with corporations to develop executive compensation packages that not only reward senior management for their “bottom line” focus, but also for improving the social welfare of its workers and the American population in general. Huge bonuses and golden parachutes made from the sweat and intellect of American workers should not be rewarded unless living standards are elevated for workers and for other citizens whose tax payments subsidize the incentives offered to corporations.

Ultimately, our current global economy and transportation structure is inducing the equalization of living standards all around the world. This is not necessarily a bad thing, especially as regards improving the health and well being of all humans (including those who willingly participate in the global economy as well as those affected by it). It is unfortunate that there are individuals so focused on the bottom line that they are willing to lower living standards wherever possible in order to satisfy their own avarice. We should all aim to be socially responsible individuals. If we cannot convince corporations to think and act in a socially responsible manner, then perhaps we should consider boycotts. In this information age, it should not be difficult to devise far-reaching boycotts to highlight socially irresponsible actions made by any particular corporation or entity.

Finally, we need to dissolve the connections between industry and government. Public servants should serve the public (DUH!), and therefore should not be allowed to accept gifts from lobbyists at all. President Obama has already made this a rule for his administration, though I hope that rule is followed more closely than his “no lobbyists in my administration” rule. I see no other way to ensure that politicians’ loyalties remain to the people.

This country’s government has become a sham and a miserably corrupt institution. How can we recover the dreams that the Constitution’s founders held so dear?

Jeff V

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voter/Erika: As far as the home mortgages go, we’ll see how it plays out, but I want to hear more about creating more NEW credit. The people out there that can’t get a home loan, that CAN afford it, is what I would like to see something done about.

I’m going to assume that you are getting your information from the media, Erika. Me? I work with this stuff daily, and I’m here to tell you that those with verifiable income, some cash down… and even those with no cash down and good credit/documentation via FHA loans… have no problem whatsoever getting loans for homes that qualify. And what I mean by that is you can’t buy a dump with an FHA/VA or other government insured/guaranteed loan. The home must be in minimally good conditions for the basics (which doesn’t include cosmetics, but solid plumbing, heating, roofs, not riddled with dry rot).

What you are hearing is the media compare getting a loan today to getting a loan in the days of lowered criteria and EZ money. And of course, it’s harder to get a loan because you actually have to qualify with substantiated documentation, minimal credit scores, and a reasonable income to debt ration. Yes, the lenders may have over compensated under threat of government by raising the standards a tad too high. But if left alone, as they have been slowly doing, they have become more realistic…. but not crazy.

I have a few concerns about the stimulus overall. I think Obama is on the right track as far as creating or keeping 3.5 million jobs, but majority of that is short term. I would like to see making more of a long term impact. For example, give all those companies that outsource a tax break to entice them to come back and give us our jobs back.

I’m glad to hear you have those concerns. There’s “hope” for you yet… LOL. It always sounds good to say you will “create or save” (he revised that “create” bit…) 3.5 million jobs. But the reality is he is busy increasing the size of government, and a high percentage of those created jobs are government bureacracy… not good. Especially since government bureacracy is highly inefficient on costs to production. Also, for every government job created, it takes away a job in the private sector who would be required to do it more efficiently, and bring costs down because there will be competition.

And yes… too many of those jobs are temporary. If he can actually build his green grid… assuming it’s not locked up in lawsuits as promised by the enviros… once built a wind and solar farm doesn’t have many permanent jobs attached to their daily operations.

If you’re improving existing roads, that creates jobs temporarily, but doesn’t give incentive for new business that already has road access. It’s different if you’re building a *new* stretch of road, opening up land that can be developed for more needed businesses. Devil in the details.

But, as Obama’s stimulus road show theatrics proved, the stimulus that was passed will do little if anything but increase the national debt, and stave off the inevitable.

I heard our bozo Governor say today (Oregon, so Dem of course) that if the stimulus works, we won’t see results until middle of next year. Well we had “stimulus” last October, and $267 bil (as Missy points out above) has already been passed out…. results? Nothing. Still the slide, and the hands with tin cups are still out. If this were going to work, we should be seeing *some* results now… not repeated and delayed failures.

Our esteemed Governor then also said that if the stimulus *doesn’t* work, the budget gap will grow. Hell, it’s already grown immensely… and there’s no near term relief in site for the expense under the Obama/Pelosi/Reid spending frenzy since the majority of the cash won’t even be spent for years.

This is a mess. And the best we can do as citizens is educate ourselves to put a halt to a nanny oriented government making it worse. And that is a very bipartisan duty.

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One problem is that the job projection number is an ever spiraling figure that has been revised down and down and down.

It’s an ever moving goal post.

Sort of like the ever changing, ever morphing numbers related to the middle class and tax cuts that we saw during the campaign.

There are myriad other problems with the plan.

That’s just the beginning.

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@voter: Just how does one measure whether Obama was successful in “creating or keeping 3.5 million jobs???”

Are you folks just going to believe it if he says he met his goal?

What are you going to do when unemployment continues to rise?

When will you see that the stimulus had very little to do with saving jobs and everything to do with rewarding Obama’s liberal base?

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I see what you are saying. For me, I have a few concerns about the stimulus overall. I think Obama is on the right track as far as creating or keeping 3.5 million jobs, but majority of that is short term. I would like to see making more of a long term impact. For example, give all those companies that outsource a tax break to entice them to come back and give us our jobs back. As far as the home mortgages go, we’ll see how it plays out, but I want to hear more about creating more NEW credit. The people out there that can’t get a home loan, that CAN afford it, is what I would like to see something done about. Just my little two cents.

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