The Troubled Asset Relief Program (TARP) likely kept the banking industry afloat, and few doubt the necessity to keep the banking industry solvent for the sake of functioning markets and businesses. The bailout began under the president who encouraged the housing bubble in the first place, and was accepted by the Obama Administration as a necessity, albeit an unpleasant one. But over the past couple of months, the present administration has spent much of its ‘political capital’ trying to explain the value of the $700+ billion dollar program while trying to move toward direct help to the very people the TARP was originally claiming to support: homeowners whose houses were mortgaged beyond the (falling) market value (thus, ‘troubled assets’). What issues confront the homeowner at this time?
All political stripes recognize the fact that foreclosure represents a terrible financial and familial blow. Where ‘the Left’ differs from the ‘the Right’ seems to be on the social and structural ramifications of foreclosure: Democrats and Progressives (without getting into a debate about what these terms mean) discuss the communal and social dislocation that a foreclosed home can bring to a nuclear family: the kids move schools, the parents blame each other while trying to hide stresses from children, the sense of failure that can lead to loss of job productivity (and job loss, to spin the whole cycle again). Etc. Those involved in the policy and lobbying related to the crisis also point out that victims of foreclosure might be a growing constituency, but it has no political or economic leverage the way a corporate bank does.
So moving the Obama Administration toward considering the plight of homeowners has not always been as easy a prospect as many hoped in the fall of 2008. Renae Merle, writing in The Washington Post, discusses the recent efforts by the president to reach out to homeowners struggling to catch up to mortgage payments as unemployment continues to rise (albeit much more slowly than it did six months ago) and ‘underemployment’ continues to be the way many Americans work. Merle describes the announcement thusly: “The program is aimed at the millions of borrowers whose home values have been diminished by a weak housing market, or who owe more than their houses are worth, making it impossible for them to take advantage of historically low mortgage rates. Originally, the program targeted borrowers whose loan balances were slightly higher than their property values. The program was later expanded to include those who owe up to 25 percent more than their homes are worth.” The amount offered ($15 bn) seems paltry in comparison to the TARP, but it suggests the administration’s awareness of the political need to present something to the housing sector. Moreover, we should see the funds within the context of the administration’s awareness of needed support for nonprofits, small businesses, and homeowners.
For those interested in the state of their state in terms of the housing market and the cost of living (both with and without costs for transportation/commuting), visit the Sustainable Cities Institute’s ‘Affordability Index‘ and click on your market. If you are considering a move, the resources offer great opportunity to fine tune a home search anywhere in the U.S.
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- Citi and the Government: Still a Close Relationship (time.com)
- Obama’s Plan to Stem Foreclosures Will Do More Harm Than Good (dailyfinance.com)
- Baby Steps on Foreclosures (firedoglake.com)
- $15.3 Billion In Additional Government Aid (yzerfonteinchronicles.blogspot.com)