Obama Stimulus package

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Originally Posted by sabang

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Originally Posted by Milkman

It's decided to use inflation to eat up the debt or, in other words, to print money.

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Yeh, someones got to pay the Piper and in both the UK and US I see no other way out than a combination of inflating the currency, higher tax revenue and reining in government spending. Which ain't great for the economy but arguably good for property values- real estate historically does fine in inflationary times, and maybe if you're not sure about the Banks, even more so.

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Printing money, raising taxes, and even controlling spending are really only short term solutions to a problem that has been with us for some time - and basically ignored by all - trade deficit.

In order to get on firm footing for the long haul something has to be done to significantly reduce the trade deficit - if not eliminate it.

In an extream example (and ignoring inevitable hyper-inflation) if the US were to print enough money to pay everything off, raise tax/reduce spending to balance the budget - we would just start the clock all over again on building up our debt as long as we can not bring the trade deficit under control.

Thats true Bugs, this is a structural problem that needs to be addressed. The rest of the world is actually pretty nervous that Obama might increase Protectionism to rein in the trade deficit, but I doubt it will happen in anything more than a minor way.

The 'Classical' economic solution is that the US dollar will fall to a level where trade flows become roughly equal again. As the dollar falls, so US manufactures become more competitive. Unfortunately, much of the US manufacturing capacity (and virtually all of the UK's) has already been shipped overseas. The Monetarists assured us that this did not matter- but more 'Classically' inclined economists like Warren Buffet & myself were always sceptical, particularly given the extent to which it was happening.

Consumption habits need to change too, the orgy of debt, consuming tomorrows assumed earnings today. This jolt to the economy should be in favour of that, but the Finance sector and the Fed/Government need to play their part too- really, the GOP fans might want to waffle about it but the debt explosion under the Bush admin, fuelled by irresponsible interest rate policies, lax finance sector supervision and a tax system that encouraged debt was totally reckless, an accident waiting to happen. We're sure paying for it now.

The story of the economic recovery package (a pictorial)

http://www.whitehouse.gov/photogallery/The-story-of-the-economic-recovery-package/

Bugs:

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In order to get on firm footing for the long haul something has to be done to significantly reduce the trade deficit - if not eliminate it.

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Originally Posted by sabang

Thats true Bugs, this is a structural problem that needs to be addressed. The rest of the world is actually pretty nervous that Obama might increase Protectionism to rein in the trade deficit, but I doubt it will happen in anything more than a minor way.

....Unfortunately, much of the US manufacturing capacity (and virtually all of the UK's) has already been shipped overseas. The Monetarists assured us that this did not matter- but more 'Classically' inclined economists like Warren Buffet & myself were always sceptical, particularly given the extent to which it was happening.

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Realistically - realistically speaking - how can the US significantly reduce the Trade Deficit? As we stated, the US doesn't produce things anymore (little productive capacity).

The "protectionist" talk is talk only, IMO.

Do you want to see where the pork is and in what state??

http://www.stimuluswatch.org/project/by_state

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Originally Posted by Milkman

Realistically - realistically speaking - how can the US significantly reduce the Trade Deficit? As we stated, the US doesn't produce things anymore (little productive capacity).

The "protectionist" talk is talk only, IMO.

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While I agree the current "protectionist" talk is talk only at this stage. The time to act on trade policies is once the economy has turned around - not right now.

The US does produce some things - heck the company I work for manufactures mainly in the US for export all over the world. And just as it has taken decades (started moving out in the '70's) it will take decades to move some of it back - it can be done.


Edit in to add a link:
‘Made in the U.S.A.’ isn’t dead, just different - U.S. business- msnbc.com

While there is some truth to the artical - more dollar value of goods being produced. The problem is there are less and less jobs in the area, and that need not be the case:

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It may seem like the country that used to make everything is on the brink of making nothing.

In January, 207,000 U.S. manufacturing jobs vanished in the largest one-month drop since October 1982. Factory activity is hovering at a 28-year low. Even before the recession, plants were hemorrhaging work to foreign competitors with cheap labor. And some companies were moving production overseas.

But manufacturing in the United States isn't dead or even dying. It's moving upscale, following the biggest profits, and becoming more efficient, just like Henry Ford did when he created the assembly line to make the Model T.

Just take a look at Japan and tell me that a major economy can not export/have a trade surplus. Second biggest economy in the world and they have a trade surplus - it can be done.

The U.S. by far remains the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007 — nearly double the $811 billion in 1987. For every $1 of value produced in China's factories, America generates $2.50.

So what's made in the USA these days?

The U.S. sold more than $200 billion worth of aircraft, missiles and space-related equipment in 2007. And $80 billion worth of autos and auto parts. Deere & Co., best known for its bright green and yellow tractors, sold $16.5 billion worth of farming equipment last year, much of it to the rest of the world. Then there's energy products like gas turbines for power plants made by General Electric, computer chips from Intel and fighter jets from Lockheed Martin. Household names like GE, General Motors, IBM, Boeing, Hewlett-Packard are among the largest manufacturers by revenue.

Several trends have emerged over the decades:

• <LI class=textBodyBlack itxtvisited="1">America makes things that other countries can't. Today, "Made in USA" is more likely to be stamped on heavy equipment or the circuits that go inside other products than the TVs, toys, clothes and other items found on store shelves. <LI class=textBodyBlack itxtvisited="1">U.S. companies have shifted toward high-end manufacturing as the production of low-value goods moves overseas. This has resulted in lower prices for shoppers and higher profits for companies.
• When demand slumps, all types of manufacturing jobs are lost. Some higher-end jobs — but not all — return with good times. Workers who make goods more cheaply produced overseas suffer.

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I believe over 50% of US manufactures by value are now accounted for by the aerospace and defence industries. The auto industry, which includes tractors n stuff, will account for a fair slice of the rest.

^ Hey, not true! I bought a plastic juice jug awhile back with a "Made in the USA" label. And my spinach, lettuce and onions all come from California right now.:)

Anyhoo, with all the pork in the bill and the rumblings from the populace, I reckon the best thing Prez Obama could do is to VETO the damn bill. Make all Congresspeople go back and read the dam thing. Fek, I wouldn't sign for anything without reading the dam contract, would you? For this amount of money, the people deserve to have their reps read it all and debate. What's another couple of weeks? Like Bugs et al have said, there is too much spending in there that is not stimulus. And what's the dam Vegas-Disneyland-train funding that Reid snuck in at the last mo?

Huh, I just read some pages from BG's link on the spending. Erm, excuse me, but aren't road improvements, traffic lights and kitchen reno-type things municipal or state responsibilities? And how long would those jobs last? I am particularly amused at the new traffic lights at three locations in California for $1.25 mil. Bladdy h*ll.

Obama would also raise his political stature by vetoing the bill -- show the people what a thinking man he is and get more prayer mats out for him. Now that would be a smart political move, no? If nothing else, as he is a real power monger. I did notice he said "my" stimulus bill in a sound bite. YOUR stimulus pkg, BO? What did you add to this bill? Nada. It's Pelosi and Reid's fekin bill and it's just hog feed.

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Originally Posted by panama hat

Are we not talking about endangered species protection and the jobs that are created in such areas as wildlife and environmental preservation?

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wetlands restoration that the Obama administration intends to spend in the San Francisco Bay Area to protect, among other things, the endangered salt marsh harvest mouse.

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Life is not always as simple as you, a simpleton, would like to make it out to be.

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That's spending, not stimulus.

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Originally Posted by Jet Gorgon

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Originally Posted by panama hat

Are we not talking about endangered species protection and the jobs that are created in such areas as wildlife and environmental preservation?

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wetlands restoration that the Obama administration intends to spend in the San Francisco Bay Area to protect, among other things, the endangered salt marsh harvest mouse.

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Life is not always as simple as you, a simpleton, would like to make it out to be.

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That's spending, not stimulus.

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A decent answer without put-downs, stupid references to Burma, sick remarks about my mother . . . well done.

However, you watch too much FOXNews.

So, these two terms are mutually exclusive, is that what you are implying?

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Originally Posted by Jet Gorgon

That's spending, not stimulus

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OK what about this then.

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A Money Saving Proposal When a company falls on difficult times, one of the things that seems to happen is they reduce their staff and workers. The remaining workers need to find ways to continue to do a good job or risk that their job would be eliminated as well. Wall street, and the media normally congratulate the CEO for making this type of "tough decision", and his board of directors gives him a big bonus.
Our government should not be immune from similar risks.
Therefore: Reduce the House of Representatives from the current 435 members to
218 members and Senate members from 100 to 50 (one per State). Also reduce remaining staff by 25%.
Accomplish this over the next 8 years. (two steps / two elections) and of course this would require some redistricting.
Some yearly monetary gains include:
$44,108,400 for elimination of base pay for congress. (267 members X $165,200 pay / member / yr.)
$97,175,000 for elimination of the above people's staff. (estimate $1.3 Mil in staff per each member of the House, and $3 Mil in staff per each member of the Senate every year)
$240,294 for the reduction in remaining staff by 25%.
$7,500,000,000 reduction in pork20barrel ear-marks each year. (those members whose jobs are gone. Current estimates for total government pork earmarks are at $15 Billion / yr)
The remaining representatives would need to work smarter and would need to improve efficiencies. It might even be in their best interests to work together for the good of our country?
We may also expect that smaller committees might lead to a more efficient resolution of issues as well. It might even be easier to keep track of what your representative is doing.
Congress has more tools available to do their jobs than it had back in
1911 when the current number of representatives was established. (telephone, computers, cell phones to name a few)
Note: Congress did not hesitate to head home when it was a holiday, when the nation needed a real fix to the economic problems. Also, we have 3 senators that have not been doing their jobs for the past 18+ months (on the campaign trail) and still they all have been accepting full pay. These facts alone support a reduction in senators & congress.
Summary of opportunity:
$ 44,108,400 reduction of congress members.
$282,100,000 for elimination of the reduced house member staff.
$150,000,000 for elimination of reduced senate member staff.
$59,675,000 for 25% reduction of staff for remaining house members.
$37,500,000 for 25% reduction of staff for remaining senate members.
$7,500,000,000 reduction in pork added to bills by the reduction of congress members.
$8,073,383,400 per year, estimated total savings.
Big business does these types of cuts all the time.
If Congresspersons were required to serve 20, 25 or 30 years (like everyone else) in order to collect retirement benefits there is no telling how much we would save. Now they get full retirement after serving only ONE term.

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Originally Posted by blackgang

$8,073,383,400 per year, estimated total savings.

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Agree. Lots of government spending needs to be looked at. The 2009 budget is $988 billion excluding the spending related to bailouts and stimulus.

The biggest component by far is Defense at $303 billion. A 10% cut here would result in $30 billion savings. An across the board cut in government spending of 10% would result in $100 billion per year.

The government is asking business to get it's house in order. Time for government to do the same!

IMHO this one is full of shit reporting, especially if they really want folks to feel bad for those who will not benifit directly from the housing plan:

Obama's housing plan triggers outrage - MSN Real Estate

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President Obama's new foreclosure-prevention plan is already sparking outrage from some Americans who won't qualify for federal aid — and from those who resent having to foot the bill for those who do.

"What do you expect from the government?" said David Newton, 46, proprietor of DJN Management LLC, which owns 232 rental apartments in the Atlanta area. "The government isn't out there to help people who obey the law and follow the rules."

Obama "told everybody, 'I'm going to spread wealth around,' and that's what he's going to do," Newton said.

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It's not like Bush didn't spread some wealth in the last few months of his term as well - all that dosh given to the banks. But then again maybe Obama is just getting started in spearding the wealth?

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The housing plan, which Obama outlined Wednesday in Phoenix, will allow homeowners who have little or no equity to refinance their homes, something that has been nearly impossible to do under current rules. It also establishes standards for government-subsidized loan modifications for borrowers in subprime loans and endorses a provision that would allow bankruptcy judges to reduce the principal on primary residences.

While real-estate professionals applauded the refinance provisions, which the White House says could help 4 million to 5 million homeowners, lots of borrowers wouldn't be eligible. For example, the refinance provision is limited to borrowers whose mortgages are owned or securitized by Fannie Mae or Freddie Mac, the government-backed mortgage companies.

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I don't agree with limiting to those only covered by a Fannie or Freddie mortgage.

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That essentially shuts out wealthy borrowers who would like to refinance but can't because they own expensive homes financed with so-called jumbo mortgages, which are too large to be owned by Fannie Mae and Freddie Mac.

Steve Rosenberg, a 44-year-old institutional stock broker in Chicago, has been trying to refinance his $815,000 option adjustable-rate mortgage for months. But his bank is requiring him to put an additional $150,000 of equity into his home, something he is reluctant to do because his income has been cut in half over the past year. For jumbo borrowers, he said, the government's message is, "You're on your own." Rosenberg saw little consolation in the president's initiative. "The only recourse I will have is a bankruptcy judge."

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But I don't have a problem not bailing out this guy. Notice it says he is reluctant to do it - not that he does not have the funds to do it. Who really thinks anyone will sympathize with a stock broker who might not be able to keep his $800k home?

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Congress has endorsed a provision that would allow bankruptcy judges to modify all types of loans. The White House's proposal would limit such write-downs to existing mortgages under Fannie Mae and Freddie Mac loan limits.

Some borrowers in hard-hit markets say they also are excluded. That is because the foreclosure-mitigation plan allows borrowers with little or no equity to refinance a first mortgage for up to 105% of the property's current market value. For some affluent borrowers heavily underwater in markets like California, that isn't enough. "We can afford to make our payments, so no one is going to help us," said Jill Wong, who has watched the value of her Modesto, Calif., home drop to around $350,000, from the $605,000 she paid four years ago. That wiped out her 20% down payment and has left her with a mortgage that has a 125% loan-to-value ratio.

Wong said she is considering walking away from her current residence since she doesn't expect that the home will ever recover its value. "What's to stop me?" she said "Years ago you would have thought it was immoral"

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Who thinks affluent borrowers should be bailed out? The bird has already said she can make the payments so why should the tax payer bail her out? If they compensate her for the decline in the value of her house, why not compensate everyone that ownes a home for the decline in their home value?

And what's with the years ago bit? Years ago it would have been immoral but somehow now it's not immoral to walk away from your debt?

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The housing measures have also upset a range of homeowners who say they shouldn't have to subsidize those who bought more than they could afford. "We've lived a conservative life," said Tim O'Brien, 61, a retired CPA from Los Angeles. "We've paid our house off and saved our money, so you kind of find yourself on this issue not agreeing with everything."

O'Brien believes that Obama's approach will prove inflationary — a hardship for those, like him, on fixed incomes. "It's kind of like they've chosen the bloc they want to support with the packages and we're going to end up paying for a lot of it through the losses we've suffered in the market and through inflation over the next 10-15 years," he said as he worked on a project restoring an 80-year-old, two-masted wooden schooner.

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This guy had me all the way up until the two-masted wooden schooner popped up. WTF? These folks were the best examples this reporter could find? A stock broker with an $800k house, a bird that admits she can afford to pay the loan - but might still walk away, and a retired guy who is so bad off that all he has to occupy his time is to restore a two-masted schooner?

I sympathiz with what O'Brien has to say - but that is pretty much how it always is. Those that have/can, have to pay to keep the rest afloat. The benifit to them (those that have/can) is that they prevent things from getting worse, and worse, and taking some of them down next.

He also has a point about inflation, but the less than $80 billion for the housing plan is not the problem - its the $1 trillion dollar standard budget, in combination with the $1 trillion dollar porkulus package, lopped on top of the complete lack of control as it relates to government spending that is the problem.

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The White House says even those who don't benefit directly could benefit indirectly if the effort boosts the housing market and lifts the economy.

Brenda Gilchrist said she feels like she is being punished twice, first by watching foreclosures depress the value of her three-bedroom condominium in Santa Rosa, Calif., and now by subsidizing borrowers who bought more than they could afford.

The price of her condo has fallen to the mid-$300,000 range, down so far from the $510,000 that she and her husband paid for it four years ago that their 20% in equity is gone. She said they decided to buy a less expensive home even though they had qualified for a $1 million loan. "We said, 'Absolutely, no way.' We chose to buy within our means," said Gilchrist, a 39-year-old managing partner of a human-resources firm. "The 'good guys' are getting a raw deal," she said.

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This bird needs to be thankful that her and her hubby are not over their head, and can afford to be tapped to help save the rest. It might not be fair, and she might be pissed about the drop in the value of the condo - but without some kind of help for those who are in over their head the value of her condo will simply continue to go down. So by now subsidizing borrowers who bought more than they could afford she is helping to prevent a furthur decline in the value of her own property.

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Jim Stoll, 67, of Stafford, Va., said tax cuts would be more equitable. "I look at all the spending in this bill, and I don't see it going to the normal taxpayer," said Stoll, who spent 26 years in the Marine Corps and an additional 16 in civil service.

"If they have to spend money, then it would be easier to put it in consumers' pockets and let them do with it what they will," he said.

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This one is kind of a catch-22. We need to get people spending again, but if they go back to spending like the were before, then we'll end up right back where we are now. The whole thing got started because folks were spending more than they could spend over the long haul.

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Others are skeptical that the plan will work. "Twelve months down the road they're going to say, 'We're going to need to throw another $50 billion at the problem,' " said Newton, the Atlanta property owner. "They should just foreclose on the properties, auction them off on the courthouse steps and see who buys them."

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I would agree this kind of position should be taken with the banks - let them fail. But no so much so with the homeowners. Something needs to be done to keep as many people as possible in their homes, and to protect the overall value of the neighborhood.

Here is another read on the housing plan - a much better job of reporting on this one:

Housing relief plan won't help all at risk - Personal finance- msnbc.com

The artical is a bit long so I won't post the whole thing:

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The Obama administration's sweeping plan to stop foreclosures is expected to help millions of Americans save their homes from the sheriff’s auction. But as the broad outlines of the plan sift through the lending system, it’s already clear that millions more won’t be helped.

With as many as 10 million households expected to face foreclosure in the next four years – more if the job market continues to deteriorate – the scope of the problem is just too big for the measures announced so far.

That means that not all of those who are eligible for help will get it.

Despite the government’s pledge to standardize the process, the decision to modify a loan to make it more affordable still rests with individual lenders, loan servicers and investors. That means that two homeowners in comparable situations dealing with different servicers may get two different outcomes.
“There's $75 billion targeted for this program, and there is a much bigger hole than $75 billion,” said David Resler of Nomura Securities International. ”So who do you pick?”

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Indeed who to pick? Will be interesting to see the details of the plan next month.

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But many homeowners won’t qualify. For starters, they’ll have to show that 31 percent of their income will cover a monthly payment for the full principal amount at 5.1 percent interest. Those who were too overextended to begin with, or who have lost their jobs, won’t be able to sustain the lower payment and won’t be eligible.

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Granted they need to draw the line somewhere - but - I'm not so sure about this bit.

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The plan also only applies to owner-occupied homes. Those who may have rented out their house because they can't afford the mortgage will be considered "investors," none of whom will be eligible.

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I don't have a problem with this bit either. Sure some will be exclueded that probably should not. But once they even crack the door for "investment" properties they will bascially be opening the flood gates. One home per household, and no investment properties is fine by me.

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Mortgage modifications made under the plan expire in five years. The hope is that the housing market and borrower incomes will have recovered by then. If not, the payment reverts to the higher, unaffordable level.

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This part is probably the most worring bit to me. I am not sure if by doing this all that will happen is that we will drag this whole thing out for five years, and end up back in basically the same/similar spot.

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A second, and growing, group of borrowers now owe more on their mortgage than their house is worth. Roughly one in five homeowners with mortgages are in this category.

Many have tried refinancing to a lower rate, but lenders currently won’t loan more than 80 percent of a home’s value. The Obama plan would raise that limit to 105 percent of the current market value on loans held or sold by Fannie Mae and Freddie Mac.

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To me these guys are less of a priority - simply because you have a loan that exceeds the value of the house is not reason enough for me to justify giving them assistance.

And the limting it to only Freddie and Fannie backed loans is an issue for me as well - why are only Freddie and Fannie justified in being helped?

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For homeowners who are more deeply underwater, the holder of the mortgage would have to agree to cut the principal amount back to 105 percent of the home’s value. About three-quarters of homeowners underwater owe more than 10 percent over what their house is worth, according to Goldman Sachs.

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Wow - about 3/4 of those who are owe more than the value of their home, own more than 10% over the value of the house.

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“I would expect that term extension, rate reduction will continue to be the primary tools used to lower the monthly payment, just because it has the biggest bang for the buck,” Michael Heid, co-president of Wells Fargo Home Mortgage, told CNBC.

Homeowners who do convince their lender to forgive part of their principal face another hurdle in a falling real estate market, according to Resler.

“It might get them from under water to above water for now,” he said “but how much of a percentage decline from here would it be to put them back into the current situation?“

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And yet another problem for those that owe more than the house is worth - so the government steps up to help them now - the price of homes still is on the decline.

I think this mortgage pkg is unfair and un-American. Many call the bankers greedy. What about these folks buying $ multi-six-figure mansions with no money down when they work at minimum wage jobs? Oh, and then they didn't understand the mortgage payments *sob*. Sure, people get suckered everyday by salesmen. You learn from that. The govt comes in and saves their sorry a**es so they can keep doing it.
Yes, I commiserate with responsible folks who lost good jobs and cannot maintain their payments. So, they rent out their homes to cover the payment and move into a small flat. Just being responsible. And they can't get a break?
Sure, empty homes in a neighbourhood deflates the area's home prices, but how about the banks renting these places out?

So, what's next, paying off these losers' credit card debt? Obama is really good at throwing out the cash for his loser fans. I wonder if any of these folks will even think about getting a job anytime. No wonder some states don't want some of the stimulus money. Sure, the fed will pay more unemployment bennies for awhile and then the states have to assume the higher-cost programmes, keeping the lazy feks on the dole lines. I heard Obama may even try to circumvent these state governors and go straight to the state legislatures. Fek, he's a micro-managing power monger.

https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif

BO is welcomed to the Valley of the Sun

Heh...there's more good shots like this one...

https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif

here

I believe after some investigation we'll see that the stimulus package consists of old pork barrel projects written by Congressman for their local districts. The bills never found a sponsor and never made it out of committee so they floundered. The stimulus package gave them new life.

The same old Democrat solution has returned. Throw money at a problem and let the money circulate. Don't judge whether it's wasteful. It just 'is what it is'. Leave out the adjectives. Don't think, react. If you don't judge there are no failures. If you don't reflect you can live with yourself. Ask Barney Frank. He can handle living with himself.

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Originally Posted by attaboy

I Ask Barney Frank. He can handle living with himself.

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Funny how self serving knobjockeys are like that!:mid:

^ Good ole Barney, a house for every family via Freddie and Fannie.

I was wondering if any money was going for IT, product development, biz with new ideas? You know, where people need the education that's being touted, or is it just blue-collar worker stuff? (Oh, ya, and for engineers and a few architects for traffic lights and paint jobs.)
Crock. So, wait for the budget next week, when taxes will go up (or are they going down?) and then all the leftover pork from the stimulus bill will be added on.

I found this on another forum. But it's worth noting. Thoughts and opinions.

I do not like this.

Today, in Phoenix, Arizona, President Obama unveiled a $75 billion program designed to assist homeowners and prevent foreclosures. Here is the general outline, from Obama's prepared remarks:

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First, we will make it possible for an estimated four to five million currently ineligible homeowners who receive their mortgages through Fannie Mae or Freddie Mac to refinance their mortgages at lower rates.

Today, as a result of declining home values, millions of families are “underwater,” which means they owe more on their mortgages than their homes are worth. These families are unable to sell their homes, and unable to refinance them. So in the event of a job loss or another emergency, their options are limited.

Right now, Fannie Mae and Freddie Mac – the institutions that guarantee home loans for millions of middle class families – are generally not permitted to guarantee refinancing for mortgages valued at more than 80 percent of the home's worth. So families who are underwater – or close to being underwater – cannot turn to these lending institutions for help.

My plan changes that by removing this restriction on Fannie and Freddie so that they can refinance mortgages they already own or guarantee. This will allow millions of families stuck with loans at a higher rate to refinance. And the estimated cost to taxpayers would be roughly zero; while Fannie and Freddie would receive less money in payments, this would be balanced out by a reduction in defaults and foreclosures.

I also want to point out that millions of other households could benefit from historically low interest rates if they refinance, though many don't know that this opportunity is available to them – an opportunity that could save families hundreds of dollars each month. And the efforts we are taking to stabilize mortgage markets will help these borrowers to secure more affordable terms, too.

Second, we will create new incentives so that lenders work with borrowers to modify the terms of sub-prime loans at risk of default and foreclosure.

Sub-prime loans – loans with high rates and complex terms that often conceal their costs – make up only 12 percent of all mortgages, but account for roughly half of all foreclosures.

Right now, when families with these mortgages seek to modify a loan to avoid this fate, they often find themselves navigating a maze of rules and regulations but rarely finding answers. Some sub-prime lenders are willing to renegotiate; many aren't. Your ability to restructure your loan depends on where you live, the company that owns or manages your loan, or even the agent who happens to answer the phone on the day you call.

My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders to modify mortgages on primary residences. Any institution that wishes to receive financial assistance from the government, and to modify home mortgages, will have to do so according to these guidelines – which will be in place two weeks from today.

If lenders and homebuyers work together, and the lender agrees to offer rates that the borrower can afford, we'll make up part of the gap between what the old payments were and what the new payments will be. And under this plan, lenders who participate will be required to reduce those payments to no more than 31 percent of a borrower's income. This will enable as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.

So this part of the plan will require both buyers and lenders to step up and do their part. Lenders will need to lower interest rates and share in the costs of reduced monthly payments in order to prevent another wave of foreclosures. Borrowers will be required to make payments on time in return for this opportunity to reduce those payments.

I also want to be clear that there will be a cost associated with this plan. But by making these investments in foreclosure-prevention today, we will save ourselves the costs of foreclosure tomorrow – costs borne not just by families with troubled loans, but by their neighbors and communities and by our economy as a whole. Given the magnitude of these costs, it is a price well worth paying.

Third, we will take major steps to keep mortgage rates low for millions of middle class families looking to secure new mortgages.

Today, most new home loans are backed by Fannie Mae and Freddie Mac, which guarantee loans and set standards to keep mortgage rates low and to keep mortgage financing available and predictable for middle class families. This function is profoundly important, especially now as we grapple with a crisis that would only worsen if we were to allow further disruptions in our mortgage markets.

Therefore, using the funds already approved by Congress for this purpose, the Treasury Department and the Federal Reserve will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities so that there is stability and liquidity in the marketplace. Through its existing authority Treasury will provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can continue to stabilize markets and hold mortgage rates down.

We're also going to work with Fannie and Freddie on other strategies to bolster the mortgage markets, like working with state housing finance agencies to increase their liquidity. And as we seek to ensure that these institutions continue to perform what is a vital function on behalf of middle class families, we also need to maintain transparency and strong oversight so that they do so in responsible and effective ways.

Fourth, we will pursue a wide range of reforms designed to help families stay in their homes and avoid foreclosure.

My administration will continue to support reforming our bankruptcy rules so that we allow judges to reduce home mortgages on primary residences to their fair market value – as long as borrowers pay their debts under a court-ordered plan. That's the rule for investors who own two, three, and four homes. It should be the rule for ordinary homeowners too, as an alternative to foreclosure.

In addition, as part of the recovery plan I signed into law yesterday, we are going to award $2 billion in competitive grants to communities that are bringing together stakeholders and testing new and innovative ways to prevent foreclosures. Communities have shown a lot of initiative, taking responsibility for this crisis when many others have not. Supporting these neighborhood efforts is exactly what we should be doing.

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Link: FinancialStability.gov

Mass foreclosures and evictions just cause an overhang of unsaleable housing stock, at least in the short term, and precipitate a housing crisis for those evicted. The Banks also crystallise their loss on the mortgage, as it is unlikely they will receive back the amount they are owed by selling the repossessed properties at auction. Where mortgages can be modified, or refinanced at lower rates it is surely better to do so- assuming of course those mortgages will be serviced! With the economy in recession, and unemployment rising strongly even that is questionable in several cases.

At least the focus is on helping feasible mortgages, rather than that ridiculous sub-prime lending.

Amercia is for equal opportunities for all, not for equal wealth. Are all the TD members living in Thailand living off of big govt and union pensions?

^ Lets say you owe $500,000 on a house who's resale value is now $350 - 400K. Would it not be the simplest and cheapest way just to walk away from the place, and leave the Bank to take the loss? So someone who wants to keep their place through the hard times, but need to alter the terms of their mortgage to do so is not necessarily being irresponsible, or even bailed out. The irresponsible thing to do would just be to walk away, and stuff the Bank.

Quote:

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Originally Posted by Jet Gorgon

Amercia is for equal opportunities for all,

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:rofl:

Quote:

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Originally Posted by Jet Gorgon

I think this mortgage pkg is unfair and un-American

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That's your first problem right there . . . you try to think . . .

Unfair? Aren't you the 'get rich at all costs' advocate? As for being un-American . . . fuck-a-duck you are pathetic. Please let everyone know what is un-American. Is graft ad corruption all-American? How about having massive numbers of people murdered day by day . . . is that All-American or un-American?

You and your folksy-vapid comments mixed in with aggressive and tasteless rants are un-Canadian