Is Obama's home stimulus plan good?

Hi koriana, I thought this package was only available to people whose outstanding loans are below some specified level, and therefore mostly those that come under Fannie Mae, and Freddie Mac category. Please correct me if I am wrong on this. As I understand the mechanism, banks giving such loans are secured by Fannie Mae, and Freddie Mac. Suppose the bank gives a mortgage loan of $100,000, for 8 percent, Fannie Mae may sell it to investors in mortgage, offering them 6 percent or so. And the bank once again has the same funds to give another homebuyer. Effectively, bank makes about 1 percent or so, after covering all charges in between. Am I right in understanding the mechanism? So if banks are being given monies to accept short fall in payment, apparently, they are being asked to forego that 1 percent. If u can elaborate on this, it would be nice. The concern here is this could become a trend in our country as well. U all can be disciplined, our people are not likely be that scrupulous. :(

don't know... all we wanted was for them to drop the early payoff fee and we could have had the refinancing. they couldn't do that for us, I think because of what I explained, only the "owner" of the note can negotiate the terms. Now, that there would be no early payoff, hey, hubby is unemployed so still no refi. fannie and freddie have bought alot of these toxic mortgages, but there's still plenty of them that aren't. As far as the gov't salvation plans, I am not sure of all the details, but haven't heard of any that are actually that helpful. it was our plan when we bought this house to only live in it till one )or more) of our boys gets a good enough standing to buy it from us, then we would sell it to them for what we owed. the way some of these plans are written up, with the gov't wanting a percent of any profit, I am afraid that they would balk at the idea of selling it for just what we owed, since then we would be taking a loss really. We just don't want to go there.

Yes. A very sad state of affairs. May be u purchased it at a very high price. May be u should have consulted a proper attorney or mortgage broker for this before taking the matter for that write off. It would have helped. U know, half the people dont really understand what a mortgage is. So they cant really come up with viable solutions. Hope u still get a second chance under the Obama's scheme.

Hi carrine, I am not saying anything against President Obama! . I am looking at the scheme from the perspective of my country - if it spilled over to our country repercussions could be really bad for us as well as other investors in our country. That is why I was asking could there not have been another method thru which same objectives could have been achieved, or is this the most effective way to go about it. I am sorry - no intention whatsoever to criticize anybody. President Obama is as new to the problem as u and me my dear. So I was just bouncing the idea to check whether anybody had a better solution. Sorry if I hurt ur sentiments in any way.

Hi deebomb, I get ur view. As far as economics goes, that is setting up the country for inflationary times. But I do feel sorry for those folks who had nobody to tell them, hey stop buying - no banks stopping them - look the prices look unreasonable. Even economists were not sure when the bubble would burst, but we expect the ordinary people to have made wise decisions! I am of the opinion these people should be helped, but helped in a way that doesnt have any harmful effect either to the country's economy, or send any trends across the seas. Though my concerns are essentially related to my country the source of my concern is Obama's policy. If it succeds in ur country, our folks will try to walk out on mortgages, and our governments will have to do an Obama, so to say. Does it really mean we are likely come out of the global economic crisis, or will it mean it gets over in the U.S., and comes in India. Net effect will be the same, isn't it? After all, economies are now inextricably linked. May be u might have had a better suggestion for Obama. I am just asking u for that suggestion.

Sorry, vandana....I didn't paint a very clear picture here, I am Canadian, but bordering on the US, and being one of our biggest trading partners...I keep a very close watch on the politics of America...as it has a MAJOR trickle down effect, and a lot of our head offices are in America! Canada's economy did manage/and is managing this major economic downturn (NOT with a balanced budget)..but we have SO many more banking regulations in place...without the perks! I don't this this FIRE has gone out, and what remains in the ashes, is yet to be seen! Good discussion, vandana..have a great day!

Yes pergammano, there should be some strict restrictions accompanying the stimulus packages. I too feel the same way about packages doled out in our country. Yes, the problem also becomes a vicious cycle. Whatever u have stated makes complete sense to me. And that is the reason I am terrified that whether this thing succeeds or not in ur country, it may become a contagious disease and enter my country where we have ingeneous corrupt way to exploit it to perfection. I am also from middle class, and so u can understand my concern I suppose. :)

Hi bhanusb, with this plan in motion, I think he has put us, and the whole world in a way in a position that can be best described as "Heads u loose, tails I win". Intentions are undisputedly honorable. But the ripples may be felt all over. If he succeeds, our folks are ever ready to feign inability to repay home loans. Then our government will have to repeat Obama's measures. Unscrupulous people will virtually steal and banks can do nothing about it. All investors into our country will also suffer. And ours will not be the only nation in Asia that will ape these measures. So the impact may be felt by every country. Ultimately even if America recoups, it will still be in the same position as the position elsewhere would have changed. After all, we would no longer be buyer's market at that point of time, as our inflation would zoom. At least logically, this measure seems to be counter productive. :(

Hey maggemorgan, I liked ur answer, though it does not fully cover my requirement. I too grudgingly admit there is some good in it. The "fine tuning" and the last bit "we as consumers need to make sure that we do not enter into contracts...." impress me. That is the responsibility I was looking forward to. I was hoping somebody would ask for stipulations regarding responsibilities - so that our folks are deterred out here. Well, I am afraid I have to give u best response! Congrats. :)

Hi rebaozi, yeah - Obama is gr8. But the plan is what I am interested in. Would u have handled the matter differently? Let me tell u what I think will be the repercussions, u might succeed, ur economy will start doing well, but our folks will realize hey that is a way out of mortgages, why shouldnt we. So these people will say sorry we cant pay, and our government will have to do an Obama, which is not good for the global economy. So once again, we might be facing a similar situation as u all are facing now. And this vicious cycle will go on. Of course, this is just a speculation. We are not half as big, so the impact will be smaller I suppose. But still, do u think it is sets a bad precedent for other countries like ours to follow, or could there have been a way to keep both lenders, as well as borrowers happy?