President Obama’s recently announced allocation won’t do much for the Housing Crisis, something he’s well aware of. He’s just trying to quiet his critics.
MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
On February 19th in Nevada, Obama announced the $1.5 billion allocation to help the 5 states hit hardest by the Housing Crisis and with the highest percentage of upside down homes – Nevada (70%), Arizona (51%), Florida (48%), Michigan (39%) & California (35%). Not only have these states suffered the sharpest drop in real estate values, all but Arizona are well above the nation’s unemployment average.
The $1.5 billion is coming from the infamous TARP bank bailout funds and will be distributed to housing agencies in the targeted states. They’re being directed to use the money to assist jobless homeowners avoid foreclosure and those who are upside down in their homes. Additionally, the money can be used to assist homeowners stymied on loan modification approval due to second mortgages.
The White House is pretty much leaving it up to each individual state on how they will use the money. Florida, Arizona & Michigan weren’t even aware the money was coming and have no plans on how to use it yet.
What effect will this money really have on the Housing Crisis?
According to First American CoreLogic’s most recent report (for 3rd quarter 2009), released February 23rd, close to 25% of the nation’s mortgaged properties are upside down. That’s an estimated 10.7 million homes. What’s more, these upside down homeowners are in the negative by an average of $70,000.
So, Obama’s $1.5 billion would only help 21, 428 of the 10.7 million homeowners upside down. That works out to be a whopping 0.2%.
Michigan alone has 513,278 upside down homeowners, so even if the full $1.5 billion came to Michigan, it would only help 4.2% of them.
Do you understand why this is just “hush money” and Obama’s just trying to pacify his critics?
This problem needs to be thrown back into the laps of the banks and Wall Street firms that created it in the first place through their greed. The federal government basically bailed out the rich and stuck the middle class with the bill.
Make sure to tell your government what you think of this arrangement the next time you vote.
Drew,
I must respectfully disagree with your key premise. This is “hush money” because the need is greater than the money provided? 1) Most government programs are not funded to solve the majority of the problem they were created to address. 2) If this program were funded to meet the total need then we would be looking at another trillion dollar program and no one is ok with that. 3) If three of the states have no plan for their present allocation then why should they get more? Let them design an effective plan of implementation and if they are successful then they can get more dollars. I believe that every little bit helps. There is no silver bullet to get us out of this crisis. It will be a combination of things. Any plan Obama comes up with must be modest in scope given the public’s disdain for bailouts. To characterize this program as hush money is a stretch which you cannot prove. Let us stick to the facts. FYI, I am 100% in agreement with your previous post regarding loan modifications.
Thanks for posting an opposing view Malcolm! You make some great points, but I still believe Obama only did this to quell negative public opinion polls. There’s so much more he could do that wouldn’t require money.
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