Michelle Malkin » Questions & answers and more questions about O’s massive mortgage entitlement

Questions & answers and more questions about O’s massive mortgage entitlement

By Michelle Malkin • February 18, 2009 11:28 AM

The White House just released the dirty details of Obama’s massive mortgage entitlement program.

Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affordable

A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners

Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac

In addition, there will be forced mortgage modifications (bad idea when GOP pitched it, bad idea now) and unprecedented new meddling in private loan contracts, including a $10 billion “insurance fund,” $100 billion more for Freddie and Fannie (rewarding failures again), and a provision to “Allow Judicial Modifications of Home Mortgages During Bankruptcy for
Borrowers Who Have Run Out of Options” (pushed by Dodd and the Dems for more than a year now).

More details:

“Pay for Success” Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive “pay for success” fees – awarded monthly as long as the borrower stays current on the loan – of up to $1,000 each year for three years.

Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.

Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration — together with the FDIC — has developed an innovative partial guarantee initiative. The insurance fund – to be created by the Treasury Department at a size of up to $10 billion – will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index.

Now, before we get to questions about O’s plan, let me remind you of the basic questions I had when Mitch McConnell proposed the GOP’s moronic mortgage entitlement plan two weeks ago:

Question: Why should government be guaranteeing mortgages? Isn’t that what got us into trouble in the first place?

Question: Why should government be setting mortgage rates? Aren’t those supposed to be set by the market?

Question: How can Republicans on the one hand argue that Fannie Mae, Freddie Mae, and other interventions in the housing and mortgage markets were bad and then at the same time propose a doomed policy along similar lines?

Question: Have Republicans learned nothing from the housing meltdown? “Credit-worthy” borrower = anyone with a pulse. Who will pay when these borrowers default on their loans? Taxpayers will.

Question: Who will sell these mortgages? Probably the banks. What incentive do they have to ensure the credit-worthiness of borrowers, since they will bear no risk if the borrowers default? Sounds like a formula for another mega-subsidy to the banks…to go along with all the others.

Question: Why do Republicans continue to believe, as Democrats do, that the number one goal of economic policy should be to prop up housing prices? (Recall McCain’s moronic $300 billion mortgage plan.) Why not let the market determine the correct level of housing prices? Clearly, in many parts of the country, housing prices are still too high.

The proper response by government is to let the market allow prices to decline.

The problem is too much borrowing, too much artificial inflation of home prices.

On what planet should the Republican/conservative alternative be to encourage more borrowing and to prop up prices so they don’t fall “too much?”

This is more of the same old, same old: Kicking the can down the road. Real change — fiscally repsonsible change — means sucking it up, allowing housing prices to fall, and getting the government out of the home-lending business.

What a disaster and — coming from Sen. McConnell — how sadly, utterly predictable.

More than a year ago, I called for the GOP to distinguish itself from the Big Government Democrats running for president and demagoguing this issue. Remember?

MakeStickers.com

The bipartisan meddlers in Washington are going to make the housing “crisis” drag on for a decade when, if they had adopted the suck it up plan in the first place, it would have been over by now.

You remember what the response from Senate GOP staffers was to my questions? They rationalized their support for this disastrous “solution” by explaining to me that Republicans needed to be “for something” because they didn’t want to look obstructionist.

Now, just as I warned, Obama has picked up the mortgage entitlement ball and run with it — with the muscle of ACORN thugs behind him. How is the underlying premise of his plan any different than what Senate Republicans foolishly championed two weeks ago?

At least the House Republicans seem to have a clue. Here are questions about O’s plan they’ve released this morning:

1. What will your plan do for the over 90% of homeowners who are playing and paying by the rules?

2. Does your plan compensate banks for bad mortgages they should have never made in the first place?

3. Will individuals who misrepresented their income or assets on their original mortgage application be eligible to get the taxpayer funded assistance under your plan?

4. Similarly, will you require mortgage servicers to verify income and other eligibility standards before modifying mortgages?

5. What will you do to prevent the same mortgages that receive assistance and are modified from going into default three, six, or eight months later?

6. How do you intend to move forward in the drafting of the legislation?

Chris Kinnan of Freedomworks adds a few more questions:

Will people who cashed out their equity with a refinancing be eligible?

Will borrowers who never had any equity in their homes be eligible (people who financed 100%)?

What is the upside for taxpayers if housing prices recover? Who gets the gain?

And mine:

How is this fair to renters and home owners who had the foresight to take on loans they could afford?

Will illegal aliens be eligible for the program?

Why is it government’s role to take my money to fund someone else’s property value preservation?

Answers, please.

***

Obama says “all of us will pay.”

No, not all of us.

***

Question from commenter sonofdy: “Why should I pay my mortgage this month?”

Posted in: Subprime crisis

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#625744

On February 18th, 2009 at 11:32 am, ITookTheRedPill said:

O’s massive mortgage entitelement

I thought you were talking about his Rezko-assisted homestead in Chicago.
#625760

On February 18th, 2009 at 11:38 am, One_American said:

Thanks for changing the graphic’s colors, Michelle (red/blue) – it fits reality much better now.
#625764

On February 18th, 2009 at 11:39 am, Michelle Malkin said:

A reader did it for me! It is much more appropriate now.
#625789

On February 18th, 2009 at 11:48 am, sonofdy said:

Another question. Why should I pay my mortgage this month? Financaly, if this passes, I would be better off if I didn’t. Under the new rules as read on CNN, I would automaticaly get a $400 dollar reduction in my mortgage and a brabd new refinancing including a reduction in my priciple. So again mr obama.

Why should I pay my mortgage this month???
#625791

On February 18th, 2009 at 11:48 am, sonofdy said:

brabd = brand
#625805

On February 18th, 2009 at 11:51 am, Mainah said:

How do I know if I am eligible?
Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

I do believe I have now seen it all. Rewarding not only the idiots who GAVE bad loans, but the idiots who TOOK them, all on MY DAMN DIME.

My business is going belly up, why…TAXES! We barely bring home 600 bucks a week for a family of 5. It simply does not pay to do the right thing. Rewards go to the ones scamming the system, not the ones supporting it. Someday soon, I am going to have to choose between my American values and feeding my children. I would rather die than stand in Obama’s lines for handouts.
#625808

On February 18th, 2009 at 11:53 am, southsideironworks said:

I nailed this on Monday night. Now you can get a bailout because you overpaid for your home. I suppose I am singularly mad because my home is paid for, I live within my means and I dont give a crap about keeping up with the Joneses.

I do wonder how much of this housing bailout is really meant to ease the minds of foreign investors who hold the securities in which these bad mortgages are lumped into.
#625809

On February 18th, 2009 at 11:53 am, Freddy said:

What happens when someone on this program goes to sell a house that is under water? Will this special arrangement stay with the house or the borrower?

How will this affect the ability of that borrower to get a new loan on a new house?
#625824

On February 18th, 2009 at 11:59 am, shooter said:

This is wrong on soooo many levels.
They have no clue what to do but to buy everyone into the same level of net worth, socialism by default.

Hey Washington DC, obama, DO NOT BUY DOWN the PRINCIPLE!!!!!!!
#625826

On February 18th, 2009 at 11:59 am, Laree said:

This Morning Imus in the Morning,

Laura Ingraham was great this morning, I love her Nancy Pelosi imitation.

http://youhavetobethistalltogoonthisride.blogspot.com/2009/02/laura-ingraham-brings-pain.html
#625827

On February 18th, 2009 at 12:00 pm, sonofdy said:

The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

This is only if you are not behind on payments. If you are behind you qualify reguardless of who holds your mortgage. IE if you want the deal, stop paying your mortgage NOW.
#625838

On February 18th, 2009 at 12:03 pm, pecze said:

To provide an extra incentive for borrowers to keep paying on time

What more incentive do you need other than, “If you don’t pay, we’ll take the house back”.
#625839

On February 18th, 2009 at 12:03 pm, guitarplayer said:

Taking your money and giving it to their cronies – it’s not just socialism, it’s The Chicago Way.
#625843

On February 18th, 2009 at 12:05 pm, corona said:

Notice that Michelle had to mention renters - the ones who are really going to get screwed – the pols never do.
#625844

On February 18th, 2009 at 12:05 pm, Defector01 said:

Why should I pay any of my bills? My law debts, my credit card bills, my anything?

It suggests that there’s no point in paying because in the end you get screamed at and punished for following the law.

So why should I?
#625847

On February 18th, 2009 at 12:07 pm, TXGator said:

mainah,
If doing the right thing were easy, everybody would do it.

Excuse me, I have to go stop paying my mortgage now. My property tax, too, as that is well into 5 figures.

Politicians have destroyed us, we just don’t know it yet.
#625869

On February 18th, 2009 at 12:22 pm, sonofdy said:

This deal also does apply to those who financed up to 105% of thier homes value. The rule will be that the payment can not excede 31% of your monthly income so if your income decreases (like mine will when my wife stops working to care for kids) then you can take advatage of this program and the resulting mortgage can be a 15 or 30 year loan with reductions of principle or intrest rate or both to meet that 31% standard. (not sure if it is gross or net income)

So in my case that is likely to be a reduction of principle and intrest all paid for by YOU.

Thanks.
#625877

On February 18th, 2009 at 12:29 pm, RedDog said:

Responsible government authority has to come to the fore and shut this con game down now. It is illegal, period, in every sense of the word. Who the hell is in charge anymore? Citizens are likely to have to take direct action themselves, and soon, to stop this insanity.
#625878

On February 18th, 2009 at 12:29 pm, ThatSamIAm said:

THE GLORIFICATION OF FAILURE. I bought a house I can afford. I make my payments on time. My reward is more taxes. Others buy a house they cannot afford. They don’t pay their bill. Their reward is my money.

Socialism results in failure for all.
#625885

On February 18th, 2009 at 12:31 pm, Mainah said:

so what do we do? As politically-minded as I am, and fairly self-sufficient, I haven’t the foggiest idea what to do right now. Stock up on food, guns, ammo. That’s easy enough. But then what?
I cannot support this government, do I get off the grid, stop paying in? Is that Un-American? I could stop working, scam the system, get food stamps and maybe disability. But that makes me one of them. How does one throw away the work ethic ingrained in them from childhood, that seems so absent in the majority of ~~Obamabots~~Americans? I just want to take care of my own family and live a little bit of a life. Nothing fancy. But the anger is beginning to boil over. It is time to stop whining and start acting, to reclaim this country. How does one go about civil disobedience? What grassroots organizations out there will stop being politically correct and start fighting for what is right? Put me in, coach, I’m ready to play.
#625886

On February 18th, 2009 at 12:32 pm, Speakup said:

Pres. Obama to total slackers who created the toxic debt that crashed our economy, come on down, here’s a check!

Pres. Obama to responsible people too stupid to stop paying their mortgages, suck it up! Losers!

Hey, thanks for the votes.
#625890

On February 18th, 2009 at 12:33 pm, RedDog said:

On February 18th, 2009 at 12:07 pm, TXGator said:
…Politicians have destroyed us, we just don’t know it yet.

Well said. Just saw a headline that Russia and China say the Democrats in America are too socialist! Yowza! It is truly a bizarro world!
#625898

On February 18th, 2009 at 12:38 pm, jsr said:

Two years ago I made the mistake of buying a medium sized home well within my ability to pay in an area that was not appreciating rapidly so the value really hasn’t fallen. To make things worse, I made a large down payment and, to top it off, have been rapidly reducing the principle with extra payments. What was I thinking being responsible? I could have used all those payments to principle and gone to Europe for 3 months, bought a Mercedes or filled the house with large screen TV’s and other expensive junk. I am such an idiot! I want a do-over.
#625910

On February 18th, 2009 at 12:47 pm, behiker said:

On February 18th, 2009 at 12:31 pm, Mainah said:

That’s exactly what I’ve been wondering, too. Nearly everything I read on here outrages me, but how do we turn it into action. I can’t just drive up to DC and expect congress or Obama to notice me and a handful of others holding signs in protest. How can we organize a huge march on Washington? Anyone? I’ll get the ball rolling, how about April 11? That’s the Saturday before our taxes are due. Do we have to get permits? How do we get the word out?
#625911

On February 18th, 2009 at 12:47 pm, tomg51 said:

Is there any vote on this?
Or being TARP2, does it just happen?
And who wrote it?

I want to properly focus my anger.
#625915

On February 18th, 2009 at 12:51 pm, Mainah said:

we had better get our butts in gear before this idiot gets his civilian army, and before our Army forgets their role.
#625932

On February 18th, 2009 at 12:59 pm, Mainah said:

behiker, I guess the way to do this would be to get on state specific forums and spread the word. We would need someone higher on the food chain to help us organize. But this is what America was built on, people fighting back. It might not be easy or comfortable, we cannot do it from our easy chairs, or play it like a video game. But this country is worth it. Frankly, the younger generations are too soft and too spoon fed to stand for anything, especially if it is hard work. It is up to us, the generation that still gets goosebumps when an old soldier walks by.
If we wait too long, it will be too late, at the pace he is moving to change us into something very very different than our forefathers intended.
#625934

On February 18th, 2009 at 12:59 pm, Jarhead said:

it’s all in the math. http://worriersanonymous.org/Share/Mnpakettle.html
#625937

On February 18th, 2009 at 12:59 pm, Jarhead said:

Good ole Ma and Pa.
#625943

On February 18th, 2009 at 1:01 pm, sonofdy said:

and before our Army forgets their role.

The army sees what is going on as well. There is a reason we swear to the constution first.
#625944

On February 18th, 2009 at 1:01 pm, walterc said:

The problem I see with not paying my mortgage to take advantage of this program, is that the government gets it’s hooks into me. No thanks!!!

I have a conventional (no Fannie/Freddie guarantees)mortgage with some equity, I think I’ll keep the government out of my business as much as possible.

And like Mainah and behiker said, how do we fight back other than posting on some blogs?
#625964

On February 18th, 2009 at 1:12 pm, sonofdy said:

The problem I see with not paying my mortgage to take advantage of this program, is that the government gets it’s hooks into me. No thanks!!!

Thats alright, you will pay for it anyway.

Thanks!!!!
#625965

On February 18th, 2009 at 1:12 pm, Mainah said:

behiker, I think that if we are going to even try, we should recognize right off te bat that the average American cannot just jaunt off to DC. (No private jets here)
If we are going to do this, we need to try to make it doable for more people, bigger bang, fewer bucks. What about organizing rallies in each states’ capitol? All to occur the same day, April 11 perhaps? If representatives from every state organize and get their local talk radio folks in the mix, maybe it will make a bigger statement? I cannot get to DC, but I sure as heck can get to Augusta.
#625977

On February 18th, 2009 at 1:21 pm, cabrerski said:

I’ll bet the officers and directors of Fannie Mae and Freddie Mac are rubbing their hands together with glee. They will now be able to show growth and vote themselves some major bonuses.
#625994

On February 18th, 2009 at 1:35 pm, behiker said:

Mainah – agreed, locations around the country would work best! I’m in Richmond, VA, so I can just as easily drive up to DC as I could stay here. Perhaps we could still have one in DC for anyone who might be able to get there. I’m going to contact Eric Cantor and maybe some local talk radio folks. Do we have volunteers from other states? Here’s our chance to make a difference.

Michelle Malkin… what do you think? If we start something and get it growing, could you help us out?
#626012

On February 18th, 2009 at 1:44 pm, judybeth said:

Can somebody please find out the names of the CEO’s(?)at Freddie Mac & Fannie Mae? Besides President Obama, the Chicago mafia, Barney Frank, Chris Dodd, the Clintons, etc.,who are the Congressmen and political figures who have benefited from loans and mortgages through GSE-Govt Sponsored Entities like Freddie Mac & Fannie Mae? They should be exposed!

Beginning with Budget Year 2001 through BY2008, the Bush Adm warned about the need for more regulation of Freddie & Fannie Mae. That advice was ignored time and time again by the Banking Cmte. President Bush should have pushed harder for regulation, I agree! He listened to poor advice!

However, at the same time, the DNC’s Dean Team goal to use every “dirty” tactic to undermind, attack, smear, ignite more Anti-American sentiment in the World, endanger our military and the War on Terror, destroy President Bush and his Adm with what proved to be false allegations several times, to create less and less confidence in the President Bush – to the point of “hatefulness”, the REAL incompetents in charge of Freddie Mac & Fannie Mae continued their questionable business practices un-deterred for years toward catastrophe!

Why aren’t the members of the Banking Cmte called before an “Ethics Cmte” or have “Accountability and Ethics” for Congress been discarded? Hummm…!

While the DNC accomplished its goal to destroy confidence in President Bush, they have certainly failed miserably to create any confidence in President Obama! Obviously, he is NOT in charge! He is the “puppet- president” and voice of the Pelosi/Reid “old (very old)far left liberal” morally bankrupt Agenda! jb
#626061

On February 18th, 2009 at 2:25 pm, battleaxe said:

So the banks lend money and expect a certain return. Instead of foreclosure, sale of the property, and writing down the bad debt, Führer Obama says the debt will be modified in the debtors favor. This will remove the banks’ ability to fire-sale the property to recover some of their investment and basically cause the death spiral of the remaining lending institutions and the value of the US dollar. If you think it’s hard to get a loan now, imagine how hard it will be when banks aren’t allowed to expect to be repaid. Wait till this hits the credit card market.

It’ll never happen, but we need to repeal the stimuluses, take our lumps, and move on.
#626075

On February 18th, 2009 at 2:40 pm, cheapseat said:

buying these bank owned and foreclosed properties is not easy. the banks don’t much want to negotiate with these because they think the gubmint will do what it is doing, meaning the taxpayer will pay off the spread between the loan amount and the market value. until obambi stops encouraging these hopes of bailouts, the market will remain frozen as the assets get worth less and less, but the banks won’t sell them because they believe they can cry and get bailout money.
#626127

On February 18th, 2009 at 3:24 pm, TXGator said:

mainah,
Man, it’s like reading into a mirror…you have summed up what I’ve been thinking for years. This didn’t just happen…they don’t spring socialism on us…they just gently warm the water until it’s too hot.
I’m in for some civil disobedience! If the people who do the right thing stop, then who helps those that don’t?
POLITICIANS?
Count me in as someone who will change their life to alter the course of this country. What can we do, short of making politicians live in fear?
#626137

On February 18th, 2009 at 3:28 pm, robhic said:

“How is this fair to renters and home owners who had the foresight to take on loans they could afford?”

It’s not. Next question…

Will illegal aliens be eligible for the program?

It’s Brobama’s America. Of course they will.

Why is it government’s role to take my money to fund someone else’s property value preservation?

Because they can. Next.

Answers, please.

See above. Next.
#626220

On February 18th, 2009 at 4:06 pm, Texas T said:

What kind of food are you guys stocking up on? I’ve been stockpiling dry beans, rice and pasta, as well as getting the garden and the chicken coop going. Seriously… any other suggestions?
#626221

On February 18th, 2009 at 4:06 pm, Mainah said:

been thinking….what if the real working Americans simply didn’t go to work? Small business owners refuse to open their doors for one day, a united front? Imagine the impact if lots of small businesses simply closed for a day? Beyond the financial aspect of it, it would halt a good deal of life in the US. The deadbeats that don’t have jobs would have nowhere to go play, Obamamessiah would have less of our hard-earned money to feed their lazy butts with, and we would feel like we were being heard. What’s the difference, they’ll just take our money anyway.

No one can force us to work. No one can force us to perform the services that keep this country running. Besides, a taste of what is coming when this country really shuts down will be good practice.
#626227

On February 18th, 2009 at 4:11 pm, Mainah said:

http://www.survivalistboards.com/ has some good suggestions.
#626314

On February 18th, 2009 at 4:49 pm, wren said:

The key to stopping the mortgage bailout may be to provide incentives for banks to refuse to take government money so that they don’t have to participate in these government arrangements.

If there are any banks that are willing to declare that they won’t take government money and won’t participate in this bailout program, please let us know so that we can all move our deposits to those banks.

What do you think? Would this approach be possible? Would it help to save our free market system?
#626320

On February 18th, 2009 at 4:55 pm, katablog said:

Now wait a minute. Why would a bank want your deposit – which presumably they have to give back when you want it when the alternative is to get your money handed to them which they don’t have to give back?
#626328

On February 18th, 2009 at 5:00 pm, wren said:

To: katablog #44

The banks use our deposits to make loans.

If the banks don’t have deposits, they go out of business.
#626375

On February 18th, 2009 at 5:28 pm, Texas T said:

thank you Mainah. Looks like good stuff
#626450

On February 18th, 2009 at 6:25 pm, katablog said:

Wren #45: The bank can wait for you to make a deposit so it can make a loan and all the time worry that at any time you may demand your deposit back; OR, the bank can take FREE bailout money from the Government and make a few loans all the while bleeding the government for more money to make more loans.

Now ask yourselves – which is more profitable especially in the short term.
#626492

On February 18th, 2009 at 7:10 pm, Pat said:

Why do Republicans continue to believe, as Democrats do, that the number one goal of economic policy should be to prop up housing prices?

Because it keeps property taxes rolling in to their crooked friends in the states. And because if all the homeowners that we financed 100% walk away from their Fannie/Freddie loans, the govt will be liable for much more than they could possibly raise because of their foolish loan guarantees for anything and everything. They don’t give a hoot about the taxpayers or the homeowners, just their own butts in a sling.
#626529

On February 18th, 2009 at 7:59 pm, Mainah said:

http://www.resistnet.com
#626557

On February 18th, 2009 at 8:42 pm, Republicanvet said:

Refinancing for Up to 4 to 5 Million Responsible Homeowners to Make Their Mortgages More Affordable

Good luck with finding that many.

If they were responsible in the first place, they would have found a place and a mortgage they could afford.
#626567

On February 18th, 2009 at 9:06 pm, Random-American said:

I’ll soon be sporting this on my bumper…

http://www.cafepress.com/mortgageproblem.359457968
#627159

On February 19th, 2009 at 12:09 pm, corona said:

a concise explanation of the boondoggle
#629553

On February 21st, 2009 at 1:47 pm, DannoJyd said:

Will illegal aliens be eligible for the program?

This question earns Michelle my support.

My question is, When will the persons responsible for the ‘toxic assetts’ be held accountable?

DaBamanomics sucks.