This “plan” is so bad (and scary)I find it difficult to believe that it will be taken seriously. Then again, we do not have serious people in charge at the moment.
This guy must go - soon.
Actually this plan is not about the homeowners at all. It is about the banks, all the big banks! The banks are so underwater with their mrotgage portfolios that they are desperate to NOT foreclose on houses. When they foreclose, they have to RECOGNIZE the loss on their books, and in essense the big banks will be shown to be bankrupt.
I saw yesterday on FR a good analysis of the problems the banks have with subprime, option arms, o% down mortgages and it is huge.
The only way out is for banks to keep the inflated house value on their books any way possible. This plan is another Goldman Sachs sponsored scheme to keep the people from learning how screwed we are. By NOT having to foreclose and dispose of houses at probably 50% of what they have listed as the value (remember, most of the problem mortgages are in Ca, NV, Az, and FL which had huge runups in prices), the banks can pretend they are still solvent.
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The bankers have even invented a new phrase to describe this deception. It is called ‘extend and pretend’. In essence that means the banks ‘extend’ the time before they foreclose on your house (in some states, people have not been paying their mortgage for over a year and have not yet received a foreclosure notice!). Once they extend, they ‘pretend’ the house is still worth what they had it appraised at when the mortgage was written.
Obama is helpfully stepping in and offering the banks another way to ‘extend and pretend’ by having the gov’t take over the house (at the inflated price of course). The bank is happy because they have just passed the risk to the gov’t, the ‘homeowner’ is happy because they stay in their house, and the taxpayer is screwed.
This is just another way of extending the inevitable collpase.