Sunday, September 20, 2009

Mortgage Assistance for Unemployed Gains Steam

Eventually we will reach the point no one has to work in America; we're getting there in a hurry.

This headline won't be new to FMMF readers - the first trial balloons went up 3 months ago. [Jul 15, 2009: Reuters - Obama Mulls Rental Option for Homeowners, along with Paying Mortgages for Unemployed] Now the proposals are gaining steam - depending on how it is structured these is laying the groundwork for yet another massive bailouts for banks.... again.

Via USA Today
  • The Obama administration is engaged in high-level talks about providing financial assistance to homeowners who've lost their jobs and can't afford their mortgage payments. The Treasury Department held meetings on the subject as recently as Thursday with key stakeholders, according to Laura Armstrong, a spokeswoman for Hope Now, an alliance of non-profits and mortgage servicers, and more discussions are planned.
  • The meetings have included major lenders, economists and government officials from Treasury, the Department of Labor, Hope Now and the Federal Reserve.
  • Proposals include getting servicers to let jobless homeowners skip some monthly payments, according to Faith Schwartz, executive director of Hope Now.
Skipping monthly payments would not be something egregious other than the fact that is servicers actually thought this would allow them to collect more money in the long run, they would already be doing this on their own accord. So the fact it has not been done by businesses who are... well, in the business of collecting as much money as they can - tells you how effective it will be.

But it gets much more fun from there as we see other options; and surely our oligarchs will convince the government to "pitch in", which effectively is code word for direct transfers of taxpayer wealth from government to financiers pockets. Why not? It's worked for over a year now... let's keep the gravy train going.
  • Another possibility that has been discussed includes grants or loans to temporarily cover part of the mortgage costs for homeowners who become unemployed, says Paul Willen, a Federal Reserve Bank of Boston economist.
Now that's more like it. Loans? Nah - people have to actually pay that back to their fellow citizens. Grants? Now that's more like it - that's a direct stealing from future grandchildren, and putting it directly into the pocketbooks of financial executives, with a short stop at GO (collect $200) at the homeowner's bank account. I like this proposal the most.... (I am all for efficient stealing of money from future generations) so let's do it.

You can almost hear the saliva forming on the lips of our oligarchs... look at these quotes, it's GREEEAAAT!
  • "Treasury has now brought us all together," says Jack Shackett, Bank of America's head of credit-loss prevention, who is involved in the discussions. "Even if it takes Treasury awhile to get some guidance out, the talking itself is great," Shackett says.
$75 billion here, $50 billion there, $100 billion over there - just keep putting it on the IOU. Our money trees are endless.
  • The discussions come after a $75 billion plan announced in March by the administration. That plan seeks to prevent foreclosures and get homeowners into more affordable mortgages but has been criticized for getting off to a slow start.
  • But now, with unemployment nearing double digits, some economists say efforts to prevent foreclosures must also involve financial help to homeowners who lose jobs. Otherwise, they say the housing recovery could stall.
  • "At this point, the idea that unemployment is the real problem (in the housing crisis) is the conventional wisdom on Capitol Hill."
The really funny part of this, is almost all of this could be avoided if someone took away the punch bowl when prices of houses were going in the "correct" direction. But that would be preventative which is not how America operates. Reactive? We dominate reactive.

Since we did not want to stop the first party from continuing, we'll pay for it on the back end. Even more funny is all our policies to "fix" the housing market (i.e. making sure prices go in the "correct" direction) have to do with bringing an even larger punch bowl to the next night's party.

Hmmm, I wonder how that will work out in the next 5 years.

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