Will Obama’s Housing Plan Work?

Lower Monthly PaymentsUnder this plan, millions of homeowners could have the opportunity to refinance their mortgages to a lower monthly payments if their house is now worth less than they owe on the mortgage. Sounds good in theory, I have to admit, but any lenders would have to agree to participate in this program, which could throw a big monkey wrench into this program. If mortgage companies refuse to participate who will really benefit? I don’t pretend to have the answers, just posing the question.Save People From Potential ForeclosuresAnother leg of this plan is to reduce the monthly payments of some homeowners who are facing foreclosure so they won’t lose their homes. This sounds great, but my question is; if these people are not making their mortgage payments now, what’s to say they will make their payments under this new plan? If they don’t make their payments then what happens? We all know the answer to that, more foreclosures. So does this plan help US housing marker? Or just delay another round of housing market crippling foreclosures in the future?Who This Plan Does Not HelpPresident Obama says this plan will not help real estate speculators nor investors buy homes at cheaper rates. While on the surface that sounds really great, the other side of the coin is this; if investors who obviously have money to spend want to buy up a lot of the inventory on the market at a reduced rate, wouldn’t that actually help the housing market by reducing inventory?This plan is also meant to not help people who knowingly bought more of an expensive home then they knew they could afford. But who determines that? Are more people in foreclosure because they lost their jobs or because they bought more house than they could afford? I think the President’s plan should explain how that is determined.Admittedly this program will not save every home, and it shouldn’t. Yet I’m unclear exactly how many people will actually be helped by this plan and how many mortgage companies will participate in it, however whatever is going to happen under President Obama’s housing plan, expect to see it start to happen fairly quickly. So if the plan starts to work fast, there may be a slow but steady decrease in the number of foreclosures. That would be good.I’m still not sure how exactly this is supposed to boost housing sales, help property values recover, or help the mortgage crisis. Obviously, this plan is not going to stop foreclosures. Meanwhile, each investment community also needs to think about how we can stimulate the current economy and stabilize the housing market.To read more articles from REI Circle, please visit www.reicircle.com