Mortgage Rate News

Yesterday, we took a look at what John McCain would do about the housing market crisis if elected. Today, we will have a brief overview of what Barack Obama plans in terms of helping homeowners hit by the housing market crisis.

Barack Obama and the housing market crisis

Like John McCain, Obama has not gone into great deal about what he would do to “fix” the current problem of foreclosures and imminent foreclosures. However, he does offer some thoughts on what has been proposed so far:

• Backs the Democrats’ plan for shared equity with the Federal Housing Administration (FHA) if a home loan modification is backed by the federal government.
• Agrees that the FHA should be allowed to back home loan modification that have been written down by mortgage lenders.
• Wants a $10 billion foreclosure prevention fund. This would go toward aiding those in danger of foreclosure sell their homes or get a loan modification.

My main problem with the Barack Obama plan, as well as the John McCain plan, is that neither of them proposes rewarding those with good loans — or those who can continue to afford paying. If I got an ARM with a teaser, but I made sure that I could make mortgage payments at the higher rate, there would be no relief or loan modification for me.

My issue is that, while it is nice to help those that are in trouble, the process helps those who may be primarily responsible for the fact that they are in trouble, without rewarding those that have made sound financial decisions. While it would be nice to learn from this whole mortgage mess, it is distressing to think that the main lesson is that if you make poor decisions, someone else will bail you out.

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mortgage lenders, loan modification, FHA loans