When Obama took office in the beginning of this year, he promised that it would help 5 million American households who were struggling with defaulting on their mortgages and eventual forclosure of their properties. So far the number of people that have been helped hasn’t been exactly staggering.
The data for April and May prove that Obama’s plan to rescue those facing mortgage foreclosure is a dismal failure. Since this issue was the cornerstone of his economic program during the campaign, its abject failure is a significant setback for the Administration’s economic plan.
In a recent article at TheHill.com, Dick Morris had this to say about the issues :
Why is Obama’s plan falling so far short of the mark? The fault is its own restrictions. You cannot get a loan modification if:
· You have lost your job
· You owe more than 5 percent above what your house is worth
· You are already in default
· You have not yet missed at least one payment
· Your lender does not want to participate
· Yours is not one of the half of all mortgages insured or owned by Fannie Mae or Freddie Mac
· The reworked mortgage payment would come to more than 31 percent of your income
· Your mortgage is over $759,000
· The home is not your primary residence
The number of beleaguered homeowners who can slip through the eye of this particular needle and qualify for a mortgage modification is tiny.
While many of those who were seeking the assistance Obama promised believe the problem lies fundamentally with Obama’s plans, there is another side. That other side is the large portion of the mortgage industry refuses to abandon “business as usual” practices that got so many homeowners in this mess in the first place.
Is a solution at hand? Today, President Obama announced his plan today for sweeping reforms of the nation’s financial systems, among these reforms is the establishment of the Consumer Protection Agency. NPR reports that the agency will help to protect consumers from deceptive financial services and to regulate mortgages, credit cards, payday lending, and other similar financial practices.
The whole plan sounds akin to putting band-aid over a broken leg. It’s not going to heal the wound any faster. Obama also called for creation of a new agency that would oversee credit and lending practices, protecting borrowers from entering into the types of risky loans that resulted in the nationwide housing crisis.
Question is : Who’s going to watch the watchdogs? These type of consumer protection and watchdog organizations rarely can keep up with who they are charged to watch. Think of the SEC and Bernie Madoff. They’re never looking in the right place, they create red tape for legimitate business people and they usually disappear when the administration that hatched them dissipates.
So far Obama has not come up with a logical plan that attacks the targets the problem at the source. Maybe he’s just getting his feet wet with his agenda but surely he realizes there is no time to waste when hard working people are losing their homes every day.
