The Obama administration seems to be unable to accept two facts: 1) Banks are not stupid and no longer want to take risks and 2) Irresponsible homeowners are unable to qualify for loans still. No matter what incentives you tack on to a housing plan, it will not convince banks to make risky loans again and the incentives the administration is offering are pathetic. Mortgage companies would get $500 upfront for each loan they modify and then $250 a year for three years as long as the borrower does not default. After the losses these banks have suffered, I cannot image those amounts of dollars are attractive. And many of these borrowers who need to renegotiate mortgages have already proven to be people who default. The fact is that many mortgages that have been renegotiated have defaulted again.
And the government wants to give borrowers up to $1,000 over five years and pick up investor’s costs as well. That means the government wants to get more money from me to pay for people’s homes. Where is my house?
The reason the government is trying this new plan is because their “Hope for Homeowners” program has fallen flat. The banks simply do not want to absorb the huge losses and who can blame them especially when the different groups like ACORN and the government forced many of those banks to make these idiotic loans.
And foreclosures are still on the rise. Another piece of Obama’s housing plan will more than likely be defeated in the Senate as well which would have allowed homeowners to seek mortgage relief in bankruptcy court. Many people think the housing crisis is past us, but they are horribly uninformed. And no one is talking about all those empty office buildings and commercial properties that will soon begin defaulting and create some kind of commercial real estate bubble to burst.