It is pretty easy to start out by saying that I am NOT a fan of Barak Obama for President. As I have watched his candidacy unfold, I have noticed it long on rhetoric and short on reality, forethought and responsibility.
Yesterday, Inman had a story about the Obama Housing Plan. I'm not shocked...
The first thing is that I came up with stated costs of $330,000,000,000. By the way, that means that what he is proposing will cost $3,000 for every single household in the country. Of course, the Obama camp is well aware that 97% of income taxes are paid by 50% of the population, so if you actually pay taxes, it is doubtful that you'll only see a $3,000 tax increase for this program. Also, by the time it actually rolls through the halls of Congress, and gets loaded up with candy for favored causes, it will double.
So, to a little of the meat (summarized from the Inman Summary):
- Obama's first proposal would create a new loan program at the Federal Housing Administration (FHA). This program would "provide meaningful incentives for lenders to buy or refinance existing mortgages and convert them into stable 30-year fixed mortgages." The plan is intended to create "an important federal backstop." The policy statement doesn't detail the nature of the "incentives," but states that "neither lenders nor homeowners would receive a windfall from this plan." (The Housing and Economic Recovery Act of 2008 authorized the FHA to guarantee up to $300 billion in loans to help borrowers refinance into more affordable loans when existing lenders agree to forgive part of their debt. Borrowers would also share gains from the sale of their homes with the government.) Really? An incentive that isn't going to incentivize anyone that is in the transaction? Pure crap. And personally, I am a little scared that a politician is putting up a plan which will effectively make the government a co-owner of millions of "private" homes.
- A second proposal would create a $10 billion fund to assist homeowners who are facing foreclosure. The funds, to be partially offset by higher penalties on lenders who "act irresponsibly and commit fraud," would be used to "increase emergency pre-foreclosure counseling resources" and help homeowners who can't afford to own their home to sell it by offsetting the costs of the sale, including "helping low-income borrowers get additional time and support to pay back any losses from the sale of their home and waiving certain state and local income taxes that result from an individual selling their home to avoid foreclosure." The policy document adds that the funds would not be used to aid "speculators, people who bought vacation homes or people who falsely represented their income." Obama also has called for federal legislation that would "clarify and ease the ability of loan servicers to act on behalf of" mortgage investors. As I recall... lenders acting irresponsibly were already responsible for the whole mess... so they are going to be charged some more? See the above incentive... More crap
- Third on the list is a $10 billion grant to state and local governments in areas that have been "hardest-hit by the housing crisis." The funds would be used so that localities' would[n't?] need to reduce "critical public services" or "vital infrastructure spending" as a result of foreclosures. The proposal doesn't specify how the localities would be selected, how the funds would be allocated or which services would meet those criteria. Again, I think this was just a bone to try to get support from local politicians. One of two things will happen. It will be a nowhere plan that never happens... or it will cost 10x as much money because suddenly EVERY Democrat run city will need funding to help the local politicians maintain power.
After that there are some standard boilerplate Federalist plans... making the federal government take more power from the states, expanding existing agencies and enacting new departments, and passing more laws that parrot current laws.
Basically, it is a populist plan that doesn't embrace logic, but rather appeals to base emotions.
And next week, Inman will review the McCain plan... I'll probably be trashing that, too.
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