Housing and Responsibility
Posted by Larry Doyle on February 19, 2009 6:00 AM |
President Barack Obama presented an overview of his plans to support the housing market yesterday. Obama highlighted the government would utilize the following methods to support those homeowners in default or close to foreclosure:
1. Support is only provided to those homeowners occupying the residence. No support for speculators or developers.
2. The government will increase the portfolios of Freddie Mac and Fannie Mae to purchase mortgages that are refinanced. These portfolios are currently sink holes swallowing billions in taxpayer funds given irresponsible management and pathetic risk management over the last 15 years.
3. The government will work with and incent mortgage servicers to rewrite mortgages to 31% of income for these homeowners.
4. For those mortgage servicers who do not cooperate, repercussions will be made in terms of not providing government assistance to these entities if necessary.
5. Treasury will provide up to $200 billion to support these initiatives by Freddie and Fannie. Additionally the government will commit $75 billion to encourage lenders and servicers to modify loans.
6. If mortgage servicers do not cooperate, the government will support judges to “cram down” the principal of the mortgage during bankruptcy proceedings.
The Obama administration believes these steps will support upwards of 8 million homeowners in staying in their homes. Jamie Dimon, CEO of JP Morgan, applauded the steps outlined as being comprehensive. With all due respect to Mr. Dimon, he is playing the political game and currying favor with the government given JPM’s position at the epicenter of this situation.
Make no mistake, the price for these programs is being borne by responsible taxpayers, investors, and future generations. To that end, Obama played the responsibility card at the end of his speech. He did not, however, provide any specifics on the responsibility front.
I would call on President Obama to be more specific by what it means to be responsible:
1. not fathering children out of wedlock…70% of African American newborns are borne to a single parent, 50% of Hispanics, 30+% of Caucasians. The two-parent family is the strongest and most effective social program ever designed!!
2. will abortion on demand promoted via the Freedom of Choice Act lead to greater responsibility? It is beyond naive to think that FOCA will lead to anything more than increased promiscuity and further destruction of the two parent family. How can Obama truly believe this Act will promote any degree of increased responsibility? This Act is pure politics placating the far left wing of the Democratic Party.
3. keeping your kids in school. Let me remind him again that 50% of inner city students are high school dropouts.
Homeownership is a privilege, not a right. Neither privileges nor rights come without responsibilities!! Responsibilities are not words or platitudes, they are actions and disciplines practiced everyday!! I am more than willing to help, but I have no interest in throwing good money after bad.