One aspect of the plan involves people who took out adjustable rate mortgages (ARM) a number of years ago. With the low interest rate offered by these ARMs, the homeowner could easily afford to pay the mortgage every month. However, when the rates adjusted up, as planned, the homeowner could no longer afford the increase in interest payment on the mortgage.
But, Obama has a plan to help these struggling homeowners.
He is giving them an Adjustable Rate Mortgage!
From ABCNews.com:
...3 million to 4 million homeowners with adjustable-rate mortgages, would be able to temporarily have their loans modified to a lower interest rate -- for at least five years.Isn't this what got these borrowers in trouble to begin with?
Obama will give them a rate they can afford now, but in five years the rate goes up and they can no longer afford to pay the mortgage!
What a brilliant idea!
With this plan, Obama is guaranteeing that these homeowners will be in trouble again in five years, when he gets to do another bailout, or will pass the problem onto the next president.
Obama is helping people who are having difficulty paying their Adjustable Rate Mortgages by giving them another Adjustable Rate Mortgage.
You go figure it out. I have no idea....
4 comments:
Doesn't it seem likely that after five years (or more) they'll simply extend the lower interest rate (which, being held low by government mandate, is like the opposite of adjustable-rate)? Otherwise, you're envisioning President Obama (or, since it's 2014 or later, President Palin) throwing millions of people out of their homes. This would probably generate some negative press.
People wondered what would happen when the 18-month housing support for Katrina victims ran out, but it really wasn't too hard to predict: Bush extended benefits, repeatedly. That's what'll happen here.
Exactly right. In 5 years President Romney will need to decide whether to re-extend the lower interest rate of throw millions of people out of their homes. Even the evil Republican-president-to-be wouldn't do that. So, this is not so much a solution to the problem, but a deferral, yes? The cliched kicking-the-can-down-the-road method?
I guess that depends what we mean by "the problem." If the problem is that millions are going to lose their homes, and forcing down the interest rate prevents that from happening, while also allowing the banks to get back money they lent (albeit with less interest), well, this would seen to solve it. Even President Huckabee could see that.
The problem is that a large number of people were given mortgages despite the fact that they could not afford to pay the mortgage, and normally would not qualify, were it not for a government program that forced the lenders to approve the mortgages. Not everyone in the foreclosure shadow applies to this description, of course.
The problem is what do you do with these folks over the next 5, 10, 20, 30 years of their mortgages.
Why not give them $5000 for first/last months rent and security deposit and tell them to find an apartment?
Post a Comment