I do not support many aspects of President Obama’s mortgage plan for four reasons. 1. The plan makes it the responsibility of the banks and home-owning services to lower the payments down to 38% of the homeowner’s income. The government takes upon itself the responsibility to further lower it to 31%. This low interest rate will remain in effect for a minimum of five years. Since the banks and mortgage service companies are already being aided with federal money, taxpayers carry the burden for replacing the difference between what is owed now by home-owners, and 31% of their income, the 38% barrier is nonexistent. This allows people who may not need assistance to take advantage of the plan, wasting taxpayers’ money even further.
2Many of the homes at risk of foreclosing couldn’t be afforded in the first place because no or little money was put down at the start of the transaction. What made them think that they would be able to afford something tomorrow that they could not pay for today? Nothing is free. This reeks of the Madhoff scandal, in which stockholders who never second guessed a consistent flow of money during a fluctuating market but were shocked to find that their investor wasn’t playing by the rules when the flow abruptly stopped. Renters, who were not ridiculous to submit to the temptation of owning a house for free, still don’t get federal help paying rent, which is usually 40-45% (includes utilities) of a renter’s income.
3. The plan for “saving” 9 million Americans is not specific in how the administration wants to spend the 75 billion USD. The plan supports 4million to 5 million people who are not at risk of foreclosures in refinancing their mortgages and allows 3 million to 4 million people with adjustable rate mortgages to lower their monthly interest rates for at least 5 years. Exactly where the money is going? We don’t know. Let’s look at where the money is not going. The president has allocated in his stimulus only 18 billion USD for early childhood education. Moreover, for those who are already homeless, he has allocated a measly 1.6 billion. Obviously it is more important to finance the second or third homes of people who couldn’t afford them in the first place than to do something about the number of homeless people in the country. And what about Darfur? Silence.
4. The president has referred to the present situation as “unraveling homeownership, the middle class, and the American Dream itself.” To classify the “American Dream” as home-ownership is embarrassing for people who immigrated to this country because they were faced with religious and political persecution, war and lack of good education in their former homelands.
external sources:
http://www.huffingtonpost.com/the-progress-report/obamas-stimulus-package_b_155279.html, http://abcnews.go.com/Business/Economy/Story?id=6899801&page=1, http://www.usatoday.com/news/politics/election2008/2007-11-20-obama-education_N.htm