Economic Agenda, Mortgage & Housing

Going though all the documentation on Obama’s campaign website is not unlike watching Obama give a speech or during a debate; word-smithing & pretty presentation abound in Obama’s platform documents. Obama tells us what he thinks people want to hear - like all politicians - but you don’t have to read between the lines to recognize that Obama’s opinion of the average American is pretty low.

Here’s a look at the Economic Agenda - Mortgage & Home-Ownership, published by Obama:

(1) Create a government entity to track & regulate the mortgage industry -

• Problem: Democrats notoriously blocked Fannie & Freddie examination & oversight, leading to this very problem. That Obama can create an entity that appropriately regulates the mortgage industry is pretty doubtful, especially with Pelosi & Reid at the helm.
• Corollary: Another big spending idea (over $100 million) of Obama’s.
• Cost: Set-up another government agency & maintain national database, according to Obama, about 200 million.

(2) Mandate that every loan should come with a clear-cut schedule of borrower payments to lenders (“HOME”=Homeowner obligation made explicit). Only those buyers who wish to remain blissfully ignorant of what they will owe every month can ignore the numerous mortgage calculators readily available on mortgage websites, or simply don’t ask their lender (if the lender hasn’t spelled it out for them already).

• Problem: This doesn’t weed out speculators. And besides, this idea of HOME already exists. A lot of people who signed ARMs with interest rates that would increase after a couple years did so thinking that they would re-finance their ARM mortgage to a conventional mortgage. Problem was, after a couple years, market values decreased & re-financing was impossible. These homeowners knew that they would have to pay more when the rate increase kicked-in, they just incorrectly bet on the real estate market continuing its upward trend.
• Cost: Enforcing this as part of the Stop Fraud Act (100s of millions).

(3) Create a Foreclosure Emergency Fund - A government fund to pay mortgages for “innocent” homeowners. Really, Obama lays it on thickly here. “Barack Obama will establish policies to help Americans currently facing foreclosure through no fault of their own”?? Clearly, Obama doesn’t believe in personal responsibility, and (to him) Americans are as innocent - and ignorant - as when they were born. Constantly referring to Americans as “innocent homeowners” and “victims” isn’t only fallacious, it’s insulting.

• Problem: Obama even suggests that your neighbor’s foreclosed home will increase the likelihood that you will be driven to foreclosure too. A foreclosed home may drive down market values, but as long as you’re paying your mortgage, you won’t go through foreclosure! We can only suppose that Obama believes birds of a feather flock together - that you are just as ignorant & vulnerable as your neighbor. Obama is playing victim by association with us (but didn’t he discount this association argument where Wright/Ayers are concerned?).

• Cost: Unknown - likely billions of dollars, judging from other relief funds.

(4) Give Bankrupt Homeowners Protection from Mortgage Payments - Revise law toward decreasing/eliminating mortgage payments of bankrupt homeowners.

• Problem: Bankruptcy protects you from creditors & outstanding debts - it wasn’t designed to provide a free ride/free home for you. Who is going to cover the cost of the unpaid mortgage? You can already walk away from your mortgage without being held accountable for the amount outstanding (other than a credit report ding). Obama calls the current law a “bankruptcy loophole” - but this idea encourages bankruptcy filings to stay in the house payment-free. This only exacerbates the current housing crisis.
• Cost: Unknown - hundreds of millions? Makes the housing crisis worse.

(5) Refundable Universal Mortgage Credit - Obama plays more class warfare: “like so much in our tax code, this [itemized mortgage interest tax deduction]tilts the scales toward the well-off.” Are Americans on two opposite sides? Obama would have us think so.

• Hitch: A mortgage interest tax deduction is pretty basic, something rote to a filer from H&R Block, but perhaps Obama thinks a $50 filing fee is only for the wealthy.
• Cost: Ultimately, this is another $500 refund check going to 10 million people - that’s 5 billion dollars…but it’s just a drop in the well compared to his tax plan. See the next installment on Obama’s Plan for the middle class.

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