This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Obama Plan for Housing Flawed, Critics Say

Stocks in this article: FNM FRE JPM

Updated from Wednesday, Feb. 18

Critics across the housing and banking industries say the Obama administration's plan to spend up to $275 billion to aid homeowners at risk of foreclosure may be more difficult than imagined and help fewer homeowners than it sets out to assist.

The multi-faceted Obama plan outlined on Wednesday, called the Homeowner Affordability and Stability Plan, is intended to modify as many as nine million existing mortgages that homeowners cannot afford, or whose value exceeds that of the home.

One component of the plan will spend $75 billion to reduce monthly mortgage payments for 3 million to 4 million "responsible," but at-risk homeowners by matching lender reductions dollar-for-dollar. It will also provide other incentives to keep loans current and to rework mortgages instead of foreclosing.

A second component will allow 4 million to 5 million homeowners who are not yet at risk of foreclosure refinance into lower mortgage rates. Those homeowners must have conforming loans owned or guaranteed by Fannie Mae (FNM) or Freddie Mac (FRE).

The third component will provide up to $200 billion to shore up Fannie Mae (FNM) and Freddie Mac (FRE) through purchases of preferred stock and mortgage-backed securities. The intent is to boost confidence in housing finance agencies that own or guarantee half of the country's mortgage debt, and to provide additional liquidity in the mortgage market.

The plan intends to help residents who were deceived into entering risky agreements, or those who live in areas where prices have dropped so precipitously that the mortgage principal is worth more than the home. At a high school in Arizona, a state especially battered by the housing crisis, Obama said that speculators, subprime borrowers who knowingly took out outsized loans they couldn't pay off, and dishonest lenders need not apply.


Will the Obama administration's plan to help homeowners actually work?

Yes. We've needed this all along.
It will help, but more aid would be better.
No. This is another disappointment from Washington.

1 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs