“Bailout” has become one of those words/phrases in society. It’s right up there with “Universal Health Care” and “Fixing Social Security.” It sounds really good, but can it actually work?
So far, Main Street hasn’t seen an adequate share of its bailout and questions are being raised about the program. When the Obama administration announced its Making Home Affordable plan, the thought was that milions of people would receive reflief on their mortgage payments through a government-backed home loan modification, making their mortgage more affordable and the likelihood of foreclosure miniscule.
After another meeting of the minds on Capitol Hill this weekend, it’s apparent the plan isn’t there yet.
The following from an article at bloomberg.com hightlights frustration with the program:
“Senate Banking Committee Chairman Christopher Dodd said ‘I’ve had a lot of frustrations in trying to come up with plans that work.’
A Bank of America Corp. executive told Dodd’s committee that the administration stokes ‘confusion and delay’ among lenders when it announces anti-foreclosure plans before completing the program details, while Senator Richard Shelby of Alabama complained that the programs have fallen short of goals.”
Right now, the plan is targeting homeowners not currently late on their loan, but facing an imminent threat of default. The program intends to assist as many as 4 million homeowners, but to date, offers have been extended to about 325,000. In some respects, that is positive, but when you look at the numbers as a percentage of the goal, the program has a long ways to go.
Of course, even if this plan were to succeed, it still does not address the sub-prime mortgage market where much of the problems lie. But that’s probably a conversation for another day. For now, what we have with Making Home Affordable is a well-intentioned plan that isn’t being executed properly. Banks are saying the rules are too confusing and government officials acknowledge improvements need to be made. The two sides need to get busy making the plan work or the makeover of Main Street is going to fail.
