Tuesday, July 21, 2009

Transforming America by Ending Home Ownership

In his opening remarks to the nation after becoming president, Barack Obama told us he was not content with merely rebuilding America, but transforming it.

Was anyone paying attention to this?

A story we saw and then nearly forgot from last Thursday reports on how administration officials are considering new programs that would allow people to "rent" their foreclosed homes.

You might have to let that sink in for a moment. You lose your home to foreclosure? No big deal. Uncle Sam will force your mortgage lender to let you stay and pay "rent."

That might be a good thing for a small percentage of jobless Americans who are upside down on their homes and can't afford to leave town.

But it also would be an incredible incentive for many people to just "give up."

Worse, it is a huge incentive for the federal government to begin acting as landlord to the majority of America's homeowners. Over a period of time, of course. You can't just nationalize single-family housing overnight like you can the auto dealers.

As it stands, some 57 percent of America's mortgages are held by the federal government, so they are already in the housing business. In fact, one of the biggest unsung causes of our economic troubles were the bad mortgages and debt derivatives that came from the government's "we'll loan to anyone" policies of the late '90s onward.

The Obama government sees crisis as opportunity:
... Washington policymakers are considering a new round of programs to help struggling families stay in their homes, including possibly offering newly jobless homeowners emergency loans to help make mortgage payments or allowing them to rent their foreclosed home.


Economist Doug Lee of Economics from Washington is blunt. “The government’s program to assist homeowners by restructuring loans has been a failure,” he wrote in his most recent client note. “But the Government is not giving up.”

So far this year, lenders have pushed 1.5 million homeowners into the foreclosure process, according to a report Thursday morning from RealtyTrac. Government officials predict that up to 6 million homes could be lost to foreclosure in the current economic crisis. The unemployment rate hit 9.5% in June, the highest level in 26 years, fueling the rise in foreclosures.

But so far, the Obama Administration’s principal foreclosure prevention program, the $75 billion Home Affordable Modification Program [HAMP] launched in February, has generated just 160,000 90-day “trial” modifications, out of 325,000 modifications offered to distressed families.
In short, the government is dragging its feet in the restructuring program because it has come up with a better, more socialist plan: Quit goofling around with private enterprise (capitalist) solutions and go for broke. Let the Government be the Landlord!
[Herbert] Allison [manager of the TARP fund] told senators that HAMP, though announced five months ago, finally got up and running 10 weeks ago; he predicted modifications will accelerate. “This is still early,” Allison said. “Here we are, and we are trying to make it work as fast as we possibly can.”

But Allison warned senators that “even if HAMP is a total success, we should still expect millions of foreclosures, as President Obama noted when he launched the program.”
"As fast as we possibly can" translates to five months. Remember this when the government takes over your health care.

Consider this probability: The Obama Plan is to overwhelm the existing system so that Congress and the people cannot deal with the changes. Thus emergency powers will be sought and granted, and unelected and unconfirmed Czars will be collecting rent checks from millions more Americans.

This is not the result of bureaucratic bungling, although it is encouraged; it is the result of a well-crafted plan to reduce and eventually end the private ownership of homes (property) in America. Government then will become the Beneficent Guarantor of Equal Housing for All, especially those who are the losers in life's lottery.

The Looters reign; the producers get taken to the cleaners.

That's transformational Change you'd better be prepared to believe in.

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