My Two Cents on the Anti-foreclosure Plan

The very bare-boned basic facts of the Foreclosure plan set out by President Obama are the following. The plan will allow lenders and borrowers come to new terms. Most of the funds will pay for incentive money to encourage lenders to modify troubled loans and to subsidize lower interest rates to reduce borrowers’ monthly payments. Yet, after five years, the interest rate will begin to gradually adjust upward again. 

 Although this plan could possibly help four million at-risk homeowners to stay in their homes, I can't help to this this as a temporary solution. I assume that what drove most of these desperate  people who are so close to losing their homes, was buying homes they could not really afford. I hate to paint a broad brush across this problem, yet one cannot deny that greed is the fundamental root of this problem; on the part of the banks, mortgage companies and yes, the home buyers. I can't help thinking that this plan will simply postpone the inevitable; the eventual loss of the home. If most Americans feel they are somehow entitled to being a home owner, regardless of their financial situation, then the issue is more about what we feel we need to have to be part of the "American dream".  For if one does not know how to live simply and wisely within their financial means, always craves for more than they have,  then the problem will never be solved by just throwing more money at it. 

My husband and I did not buy a home during the boom. We simply could not afford it. We wanted one very much, but realistically we could not do it at that time. We saved money instead and now have more than enough for a 20% down payment. Therefore, now that homes are more reasonably priced, we are finally looking.  Yet, in looking at President Obama's Plan, where is the reward in being responsible when people who lacked self-control and sound judgement are being offered reduced interest rates among other concessions. 

I absolutely feel it's a horrible thing to lose a home. It must be a terrifying and desperate situation for the entire family. Yet, in trying to explain my position I am reminded of Suzy Orman who told a single mom on Oprah who were about to lose their home that they should sell to the lowest bidder and get a one-bedroom apartment as a way to make ends meet comfortably. Worse things have happened. 

Now if only President Obama would just come up with a home incentive (more than the 8K one form the stimulus package) to help home buyers who do have a qualifications and down-payment buy a home. It would fill up a lot of those empty homes in no time, and maybe get things moving once again.