Housing Relief?

Dick Morris provides free newsletters to those interested. In a recent one the homeowner mortgage debacle was analyzed. Obama has a plan to provide some homeowners with assistance but as always in politics the details are very telling. The important details lie in who is covered by relief programs and who would be excluded. Those excluded would fall into at least one of three categories.

One group excluded from relief would be those whose mortgages exceed the value of their homes. Another group are homeowners whose mortgage payments are at or in excess of 31 percent of their incomes. The final group would be those whose income is $200,000 per year or more.

So what could be wrong with excluding those in the circumstances described? Plenty. It is probably unwise to continue the bailout mania be it on behalf of large corporations or individuals. It is grounded in a free lunch mentality that would have us believe increasing benefits to working class Americans can come at the expense of the rich. But a family with a $200,000 income living in a large city like New York is hardly wealthy. Moreover according to the newsletter from this income group ($200,000 and over) comes one-third of the spending which drives the American economy. Designating that group as the burden bearers is likely to crimp the real stimulus- consumer spending.

But the relief program would exclude many low income people as well. Those with lower incomes (possibly brought about by job losses) could be impacted by the 31 percent rule. Then there are those who are unable to pay mortgages that should not have been granted in the first place. Many mortgages were approved because during the Clinton administration Fannie and Freedie were told not to insist on mortage down payments. Not a sound business practice and one that backfired on the nation as well as on low income people.