Moving right along, on the bailout/stimulus efforts from the Obama administration, President Obama unveiled a $75 billion plan today geared to help millions of “homeowners refinance their mortgages or avert foreclosure.” The initiative Obama said “would shore up distressed housing prices, stabilize neighborhoods and slow a downward spiral that he said was ‘unraveling homeownership, the middle class, and the American Dream itself.'”
Speaking at a high school gymnasium in Mesa, AZ, Obama told the crowd, “This plan will not save every home, but it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone.”
The plan has three basic components. One would help homeowners who continue to make loan payments on time, but are paying high interest rates and would otherwise not be able to refinance because they do not have enough equity or their houses are worth less than they borrowed. A second would assist people who are at risk of foreclosure by providing incentives to lenders to alter the terms of loans to make them substantially more affordable to struggling homeowners. The third would try to assure there is plenty of credit available for mortgages by giving $200 billion of additional financial backing to Fannie Mae and Freddie Mac, the two government-controlled mortgage finance companies.
The new plan will officially take effect on March 4, when the Obama administration will publish the detailed rules to explain it. The NY Times notes that “most of the plan can be enacted by Mr. Obama though his executive powers, although part of it — including changing the bankruptcy laws to allow homeowners to seek changes to their mortgages through bankruptcy proceedings — will require legislation.”
The White House Blog has a lot more info here. Personally, I prefer seeing this sort of bailout, the kind that helps Americans and not corporations. Nothing is going to fix this colossal economic mess overnight, but there is a sense that far more is being done by the Obama administration to fix this mess than we ever got from fool that left us with it.
[Originally published at TaylorMarsh.com]