How many more homes will be lost before the federal government actually does something? After trillions of dollars have been promised to banks, the Obama administration finally unveiled its plan to assist homeowners facing foreclosure.
As Maxine Waters reminds us, the housing crisis is, in part, the product of a system-wide regulatory failure. The Obama administration’s plan—the Homeowner Affordability and Stability Plan—aims to resolve the problem through the modification and restructuring of loans to make them affordable and sustainable. A critical first step according to our guests, but will it save your home and what still needs to be done? The issues of bankruptcy reform and regulatory oversight still need to be addressed along with the ancillary question of affordable housing and rentals for those who lose their homes.
Today on GRITtv Sarah Ludwig of the Neighborhood Economic Development Advocacy Project, Paul Leonard of the Center for Responsible Lending, Dr. Vicki Been Director of the Furman Center for Real Estate and Urban Policy at NYU, and Michelle Collins senior Vice President of Mortgage Lending at ShoreBank discuss the foreclosure crisis and Obama’s response.
Then Scott Hamilton Kennedy, director of The Garden, nominated for an Academy Award and Stuart Sender, one of the film's co-executive producers on why the battle to save a community garden in Los Angeles--the largest in the country--has so much to tell us.
Thanks to Brave New Films for video used in tonight's show.
I was distressed to see no real criticism of the Obama plan as it has been presented. The fault I find with the plan, as I understand it so far is that it attempts to make whole the people who took loans and bought property that they shouldn’t have. and the people who have ridden the real estate bubble and restore the bubble to where it was, or to some artificially deigned position.
Many people bought real estate during the bubble (since the mid-90s) when everything should have told them that they should wait until there was a correction when prices would fall back to Earth. Yes, this was aggravated by predatory lending practices and cheap easy loans, but I would NEVER get into an adjustable rate mortgage that might reset to twice the initial payment.
But why isn’t there an FHA 30 year fixed 5% down low rate assumable mortgage, even in this new plan?
I am a freelancer and couldn’t hope to qualify for a mortgage except under the circumstances which were available in the recent past, but I didn’t buy anything because I could clearly see that real estate prices were vastly inflated and that any hiccup in the interest rate would have led to disaster for anyone with an adjustable rate mortgage, and now that is exactly what has happened.
Real estate is still vastly inflated and home prices will have to fall much, much more before there can be some kind of genuine stability in the real estate market. That may mean hundreds of thousands of additional foreclosures and millions of peoples’ equity being wiped out.
I don’t know what the answer is; I have great sympathy for anyone being thrown out of their home, but I’m highly certain that this market contorting plan from Obama is not the answer. It will temporarily and artificially stem the fall of real estate prices, but in the end, it will only prolong the inevitable.
By NakedEye on February 19th, 2009 at 7:44 am