Obama's Daring Plan to Buy Your House
Mortgage rescue aims to halt foreclosures once and for all
By SARA K. SMITH
Updated 1:30 AM EST, Thu, Feb 19, 2009
So throughout this interminable mortgage crisis, the one very important question that everybody asked, and nobody ever answered very well, was this: how much were all those toxic assets (foreclosed stucco ranches on .1-acre lots) actually worth? Until that was determined, the entire global financial system would continue to collapse under the weight of trillions of dollars of bad debt all traceable to a bunch of subprime mortgages issued in Fort Myers in 2005.
You will recall that last year FDIC Chairman Sheila Bair complained pretty much nonstop about these bad mortgages and how the financial crisis would not halt until we "put a floor under the housing market" and wah wah wah. Meanwhile Hank Paulson dumped several hundred billion dollars into the pockets of his old Wall Street friends, instead, and that money has now vanished forever.
Well, finally President Obama has gotten around to developing a plan that attempts to put a value on homes with underwater mortgages or mortgages that are in danger of going into default. And the shocking answer to the home value question is this: those homes are worth whatever their owners are able to afford to stay in them. Under the plan, owners will be able to refinance at a lower interest rate, extend the term of their loans, or in some cases lower their principal -- basically whatever their bank can be persuaded to agree to change.
The government will chip in some dollars to help make this whole plan more palatable to banks, who seem to be unable to let go of this insane fantasy that they can force several million people with no jobs and no savings to repay the extravagant loans they never should have taken out in the first place.
Anyhow, it's a start! Also Obama will probably nationalize the banks pretty soon, so each and every citizen can own a part of the foreclosed American dream.
Sara K. Smith writes for NBC and Wonkette.
First Published: Feb 18, 2009 7:22 PM EST
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