Obama’s Homeowner Helping Bill, in a Nutshell
Obama has unveiled part of the stimulus bill that will set aside about seventy five billion dollars in a fund that is designed to help homeowners lower their payments on mortgage loans that he says were ones where people were snookered into buying loans at lower interest rates, then unscrupulously made to make higher payments and balloon payments when the interest rates zoomed up. These are characteristic of ARM mortgage loans, which make up a significant portion of the subprime mortgages that many say were gotten by banks under predatory lending.
Predatory lending is, in many economist’s opinion, the basis for this whole fiasco that we have gotten ourselves into. It started by hurting the banking industry and the housing industry and now it’s got the whole economy and job market by the cajones, cascading down into other major economies like Japan and China, even Germany, and making this not just a US recession, but a global recession that seems to be spinning out of control at the moment. But not to fear, you still have your health, and if you still have your home, you should count yourself among the blessed few who are flourishing, safe, and relatively secure these days.
The seventy five billion, Obama has said, is really to help those who have been responsible and have just fallen victim to predatory lending, or are victims of circumstance of bad luck, such as losing their jobs or having a business fail because of the economy, he says, but it is not designed to help those that have been blatantly irresponsible or where it is clear that they’ve really gotten in over their heads or greedy. I’m not really sure what kind of verification matrix they can use to determine this, but I can assure you, it can’t be foolproof and those guidelines do worry me a bit, although I have to hand it to the guy for trying.
The problem with the stimulus passing is that it has not gained the confidence of the consumers, and most people still feel like this will not help us pull out of the mire we are in any sooner than with no help at all. Stock markets responded in like on Friday, with the Dow dipping even lower and bellweather stocks like GE dipping to levels not seen in years and years. It’s sad really, because these stocks don’t just represent the loss of a piece of the American dream, but they also represent significant drops in people’s investment portfolios and dividend income, especially those relying on interest and dividends for retirement.
