In the wake of the stimulus plan and the housing recovery plan announced by the President last month, there has been a lot of discussion about what's fair in the plans.  Who was helped?  Who should have been?

The $275 billion housing stability plans seeks to help two groups of homeowners:

• Diligent homeowners with little equity who have been hurt by falling home prices but who are not delinquent
• Homeowners who are behind on their payments, which currently represent too high a percentage of their income

Refinancing is available only for those financed by Fannie Mae or Freddie Mac, up to their approved limits.  Those who owe more than 105% of the current value of their home won't benefit.  (In Las Vegas, this describes many homeowners.)

The administration wants to help people maintain their principle residences. Critics fear that those who bought irresponsibly or managed their money recklessly will be helped along with the genuine needy.  Those who overstated their income or took out home equity loans to go on vacation or use it for other thing s might qualify while those who were honest and people who can manage their overpriced mortgages might apply for relief along with those who are struggling.  Those who risked delinquency on their other obligations to pay their mortgage would get no help.  Because the plan will reward irresponsible behavior, the plan contains a degree of "moral hazard." 

As for the loan modification part of the plan, borrowers now do not have to be delinquent in order to have their loan terms modified. They just have to prove that their current payments create hardship.  Previously, lenders feared that buyer stopped making payments to qualify of refinancing.  Now, there is   concern that borrowers who previously had additional jobs to help pay the mortgage may try to make their income appear lower.

Since taxpayers will ultimately foot the bill for some of the housing programs, many who could use help but don't qualify will pay so that others might benefit.  For even the least judgmental, that can hard to swallow.  It is particularly galling to see corporate giants guzzle up taxpayer funds, while small businesses and homeowners grapple for credit.  (Another time, another post on that!)

Still, nine million people are expected to be assisted by the plan. With a housing crisis as serious as we have, it is impossible to help everyone who needs help in a way that will please everyone else.  Jimmy Carter once said, "Life isn't fair." Barack Obama has called for sacrifice.  Perhaps perceived unfairness is the price our country will have to pay to help nine million.

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