February 20, 2009

Another Plan To Rescue The Housing Market

So who owns your mortgage? Fannie Mae, Freddie Mac, your local bank or some unknown investment portfolio? The company you send your mortgage payments to is likely a servicer and not the owner of the mortgage. The reason for the question is because our government announced yet another housing rescue plan. This time it’s $75 billion dollars and focuses on mortgages owned by Fannie, Freddie and banks who took TARP money. Lawmakers estimate the plan will help 9 million households avoid foreclosure. We watched Washington roll out several housing rescue plans in the past six months and were told they would help struggling homeowners. Remember Hope For Homeowners? It bombed. None have proven to stop this slippery slop of foreclosures. The problem with all of these plans is the government cannot force any investor to modify a homeowner’s mortgage. The language associated with these plans is “urge” and “encourage” investors to stop foreclosing and modify. And the latest housing recovery plan offers financial incentives to investors for doing so.

Think about this… if the stabilization and recovery of the housing market is KEY to our economic recovery, why have we spent billions saving Walls Street firms, billions to others and another $787 billion on mostly non-housing stimulus.

New home buyers entering the market are getting great deals but it’s not enough to turn the housing market around by itself. A lot is riding on the latest round of taxpayer money and all we're all paying for it whether it works or not.