President Bush is announcing his supposed big fix for the growing mortgage crisis. His fix is supposedly aimed at stemming the record foreclosures taking place across the country, including here in Florida. Here's the problem: Bush's "help for struggling homeowners" -- which includes freezing interest rates on ARMs that are about to adjust, is only for homeowners who are current on their mortgage payments -- but who can PROVE that they can't afford the higher payments once their ARMs adjust.
The fix would allow borrowers to either refnance, move into an FHA loan or freeze their rates for five years.
Bush says this could help up to 1.5 million homeowners.
But ... and this is the big "but" -- how can you stem the tide of foreclosures when the borrowers you're targeting to help aren't subject to foreclosure? If you're current on your mortgage payments, YOU'RE NOT FACING FORECLOSURE. You're going to the government to essentially argue that you WILL be facing foreclosure sometime in the future if your mortgage adjusts. HUH???
If Bush wants to help "struggling" homeowners, shouldn't he target those who ARE behind on their payments, and who thus are the ones actually facing foreclosure???
Bush's plan also has incentives for insurance companies (shock of all shocks), tax breaks (even more shocking!) and expands FHA funding. So far to me, it sounds like more P.R. than actual help to people who need it. And of course, with all the incentives to finance new mortgages, won't Bush's plan add to the problem by ginning up the mortgage writing engine all over again?
Worst of all, Bush's speech to day was layered with "I'm calling on Congress to do this," and "I'm calling on Congress to do that..." an admission that in the end, he really isn't all that confident that he and his treasury secretary, Henry Paulson, can do much of anything.
Anyway, if you're a homeowner in crisis and aren't as cynical as I am, the number to call is 1-800-995 HOPE.
Labels: economy, mortgage crisis