As his approval ratings hit a new low of 44%, the president hot on the campaign trail announces yet another misguided plan to help the housing market. Called HARP, the Home Affordable Refinance Program, it is just another sham effort to convince the public that Obama has no clue about the problems in the housing market.
His previous efforts in this area resulted in just 894,000 refinances. Of those nearly 10% defaulted. When announced it was to help over 5 million homeowners with $50 billion set-aside.
This one is expected to help from 500,000 to 3 million.
So, our government is saying: if you are making your mortgage payments and your house is under water, we will help you lower your payments. In other words Freddie, Fannie, and the FHA will take on more debt not backed by value. Isn’t that how we got in this mess to begin with? In Obama’s wisdom the homeowner will take the difference in mortgage payments and spend that money to help the flagging consumer economy. Like a monthly cash rebate.
But, the economy is flagging because people don’t have jobs. And, because the public is de-leveraging. Paying down debt, making extra mortgage payments, and saving instead of spending. Why? The pubic realizes that we have a president who is doing all the wrong things and until we get one who does the right things, they need a cushion. They are in the 64% who disapprove of Obama’s performance.
Why is the government so concerned about people who have negative net worth in their house and could care less about those who have negative net worth in their 401K? Once again, Obama is picking winners and losers and retirement funds are in the loser category.
There is always a winner and a loser in a financial transaction of this kind. The winner/loser is whomever has the mortgage backed security on the house to be refinanced. They will get their money back, but may be forced to take a replacement asset with lower returns. Who else will invest in an asset with 70-80% value, even with the backing of the always stupid Freddie, Fannie, and FHA? This part hasn’t been explained. There will not be an appraisal, nor a credit report, or a job verification. The only support for the loan is a history of paying on a mortgage that has less value than the asset if backs.
So, here we go. In typical Obama fashion, a big announcement, drum roll please, about a big plan that won’t work. Made on the campaign trail where it becomes more apparent every day that the Democrats in the states that Obama is visiting are always absent from his presence. Soon only fellow lepers will be turning out for his stops.
