There are appealing aspects to that, to be sure. It won't need Congress approval. It won't have immediate impact on the budget deficit shit-hole that this country is already in. It prevents more homes falling into foreclosures. It allows homeowners to unlock additional cash from their homes, so that they can use the new cash to continue their buying habits funded on debts, and more debts. At the proposed low rate of 4%, everyone would love it.
It gets me really peeved when I sees proposals like that. The main reason for the subprime crisis that started in late 2008, triggered by the collapse of Lehman, was due to unchecked mortgage lending to those who should never be qualified for a mortgage. When the economy goes down, when the prices start its free fall, these folks can no longer count on periodically refinancing the properties to take money out of this pseudo-piggybank. The market - the Invisible Hand, if anyone still believes in free market - is supposed to check this kind of reckless behavior. The credit is supposed to get tightened - as it is happening now - and these low-quality borrowers are supposed to get squeezed out of the system, allowing the system to slowly grow back to life again. For those who have diligently play by the system, who save up religiously hoping to get a chance to buy into the market, they are supposed to get rewarded by lower properties and lower mortgage rate.
All those are out of the window, when 2012 election is coming into focus, and Obama needs to do something fast, to fix the economy. The fix is supposed to be jobs - yes, job growth - so that unemployment can go down. When regular people start having regular, steady income again, they are supposed to be able to buy again. Naturally, that is much harder to do, given the intense competition (particularly in manufacturing) from other countries like China. Given its inability to grow jobs, Obama instead looks at housing...again.
For what it's worth, the proposal is essentially guaranteeing those low-quality borrowers, once again, that they would be underwritten. All they need to do, is to stop paying their mortgage, and wait for Obama to refinance their mortgage at 4%. It does not matter anymore, whether these folks can even pay for mortgages for 4% or not. Obama (and Congress) just wants to stop these properties from showing up on foreclosure statistics. In other words, it's government-funded private housing. In Asia, there's a term for that - it's called, public housing. No matter, Americans won't call it that because it's politically incorrect. They want government out of their life and off of their backs when it comes to taxes, but they want government help when it comes to financial difficulties.
Those in Obama administration know full well that, two years into this recession, those who can afford to (and qualified for doing so) refinance, have already done so. Those, like me, who never bought into the buying frenzy in properties before property market started crashing in late 2008. Those, like me, who refinancing in the succeeding two years, given the historical low rate. To put it another way, those who can't refinance now are the one who should not have qualified for it. However way you look at it, it's effectively free money and handouts from government to these folks. And that makes me quite angry.
And then there're talks, and more talks, of supporting the property market. I've ranted before in my journal, that there's no point in supporting the market, because when folks have jobs and money, when they need a place to stay and it becomes cheaper to buy than to rent, they will buy properties again. Obviously, we're not there yet - quite far from it, in fact. While property prices have come down alot (some as much as 50-60%, in some regions), there are other places where prices never crash, per se, and where they have gone back up again already. I'm one of those too, who bought a new place for investment.
In short, I'm slowly saving up, and investing in a limited scale, while ensuring that I have sufficient buffer to cover an extended period if things turn south (eg. job loss, rental units not renting out, etc). Sure, if Obama wants to help, I'm all for getting some free money. But all the government policies and regulations I see so far have been about protecting and even extending the reckless behavior that should not have happened in the first place. (That reckless behavior includes the much screwed-up compensation structure on Wall St, by the way.)
I don't think I'll vote for Dem or GOP in 2012 at all. Tea Party is too loony for me. For a change and to make a statement, if Ron Paul is in, I'll probably vote for him.
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