02 January 2010

Government Loans Have Worsened Housing Problem

In the least shocking news since George Michael stormed out of the closet, The New York Times is reporting that the U.S. government loan program is adding to the housing woes. Gee, government intervention has made the problem worse rather than better? Who could have predicted that?



The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.
And what then is the harm? For one thing . . .

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes . . . As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.
And for another . . .

. . . banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books. Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy.
And for yet another . . .

In 2008, more than 1.7 million homes were “lost” through foreclosures, short sales or deeds in lieu of foreclosure, according to Moody’s Economy.com. Last year, more than two million homes were lost, and Economy.com expects that this year’s number will swell to 2.4 million.
Like Cash for Clunkers (that cute project where people who already owned cars were able to use their neighbor's taxed income to turn old cars in for new cars, complete with higher car payments) this loan program has had a dismal effect on both the economy and its intended benefactors. Health Care, Cap and Trade . . . who else is excited to see what this administration tries to fix next?

8 comments :

  1. Nikki said...

    Khaki, this topic definitely caught my eye as my family and I have been right in the middle of this housing mess. The bailout has promoted even worse behavior by the banks. Not only are they rat-holing money and cooking their books, they have no incentive to work with consumers with many loans already guaranteed by the feds. I am grateful you are bringing up this topic. :)N

  2. Khaki Elephant said...

    Nikki, sorry to hear that you and your family are in the middle of this mess. I hope it is becoming increasingly obvious to thinking Americans that government handouts always come with a heavy price -- decreasing the incentive for success as the American sloths wait for their neighbor to pay the way.

  3. Z said...

    I'm curious that the NYTs printed this..who knew? Excellent post, Khaki.
    i'm going to link to it right now ...everybody's commenters should know about this. WE KNOW, and WE saw it coming, but if the NYTs is catching on, that's huge.
    I've been saying for about six months now that it will take the Left to save us from this awful administration because the Right's been so marginalized for too many years....let's hope I'm right and even Leftwingers are waking up and actually love America enough to try to STOP SOCIALISM. We can dream.

    Happy New Year, Khaki. I'm always sorry when I haven't been visiting as much as I did ...your posts are so good. xxx

  4. WomanHonorThyself said...

    hey Khaki,things will get better!..HUGS!

  5. Khaki Elephant said...

    Perhaps, you're right, Z. I would hope that even some on the left are starting to recognize the disasterous results of the Obama, Reid and Pelosi policies when they are actually able to implement them.

  6. Khaki Elephant said...

    WOT, I love your optimism garnished with hugs. There does seem to be a new understanding of the left's agenda rippling across the country. Perhaps there is hope.

  7. Anonymous said...

    Obama is crazy. That's the only explanation. Or is he really this stupid?

    --Brown

  8. WomanHonorThyself said...

    hope alls well with u and yours girly! xoxoxo