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PHONY MORTGAGE PLAN
By DICK MORRIS
Published on
TheHill.com on March 10, 2009
President Obama and his big spenders are moving quickly, to the relief of those
who are facing foreclosure on their mortgages. But the program they are offering
will do nothing for those most in need.
In the fine print, Obama's plan provides no relief for any homeowner whose
mortgage exceeds the total value of his home. But these folks are the ones who
have been conned into taking sub-prime mortgages so loaded with brokerage
commissions, interest rate subsidies, bank fees and lawyer and title-company
charges that the amount of the mortgage has ballooned. These high mortgage
amounts, coupled with declining property values, have turned about 20 percent of
American mortgages upside down, so that the debt exceeds the value of the
property.
By excluding these homeowners from help, Obama is guilty of a holier-than-thou
hypocrisy. Was it not Fannie Mae and Freddie Mac that encouraged such
over-mortgaged properties? Was it not the Democrats in Congress who passed
legislation urging Fannie and Freddie to weaken the standards to allow more low-
and lower-middle-income families to buy homes?
How can Obama suddenly pretend to be so shocked -- shocked -- that about 20
percent of America's home mortgages are now worth more than the property they
finance? It was the insistence of liberal Democrats that made it so. When
Housing and Urban Development Secretary Henry Cisneros demanded that Fannie and
Freddie invest 42 percent of their assets in buying low- and lower-middle-income
mortgages, and when his successor Andrew Cuomo raised the quota to 50 percent,
what did they think would happen? When they explicitly told Fannie and Freddie
not to insist on down payments in the mortgages they purchased, how did they
think the purchase would be funded? Obviously, if you don't require the borrower
to put money down, the full purchase price must be covered by the mortgage. To
now, piously, refuse to come to the rescue of those who fell for your party's
seeming generosity and bought homes on the terms it suggested is hypocritical at
best.
But it is not only the over-mortgaged whom Obama will ignore, but those who have
lost their jobs! If you do not make enough money such that your mortgage
payments come to 31 percent of your income, you can't get your mortgage
refinanced. If your income has dropped to a point where your monthly payments on
your loan consume a greater part of your earnings than 31 percent, you are
stuck.
So we have Obama rushing to the aid of those who have been hurt in this bad
economy, but exempting from his proposed relief anyone who has lost his job and
seen a cut in income or whose property values have dropped below the amount of
his mortgage. In other words, he'll help anyone but those most in need.
And, once again, Obama would limit his aid to those who make below $200,000 a
year. While he doesn't specify this limit in his proposal, he does limit his
intervention to mortgages of less than $720,000. At standard mortgage interest
rates, such a loan would call for $60,000 or so in payments a year. To qualify
for relief, your mortgage payment can't be larger than 31 percent of your income
-- or about $200,000. Once more, Obama makes it clear that he is not the
president of anyone who makes that much money or more. He is only the president
of the other people.
Obama, of course, forgets -- or doesn't care -- that those making over $200,000
account for almost a third of the total national spending and that you cannot
stimulate an economy while constantly cutting off those people from any
consideration in any government program. But Obama is determined to try.
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