Help for Who?

Written by: Joseph A. Penny

Wednesday President Barack Obama’s staff announced a new stimulus/aid program for “homeowners”. The “making home affordable” plan proposes to help 9 million strapped homeowners afford the monthly mortgages through refinancing at lower interest rates. Effectively, this will reduce monthly payments allowing homeowners to make payments on time. In theory this will reduce the amount of foreclosures in the already terrible housing market.
On the flip side, the housing program will not be able to help all homeowners. There will be very strict regulations on who will get the aid monies. The Department of The Treasury said that the money was only for the more responsible homeowners. Some of the most volatile housing markets have the highest concentration of people ineligible for aid money. These ravaged areas include California, Arizona, Florida, and Nevada. What is in store for these borrowers is in the works but not yet decided.
The government defends their position by bringing up the “bank run theory”. The government is apparently afraid of a run on banks for the loan money and a potential shortage of banks and other depository/finance institutions to service this money. In that case we would be facing a whole bunch of insolvent banks…again!

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