You May Find Yourself in a Beautiful House
by Rebecca Schoenkopf
The New York Times opinion page weighs President Obama's trip to Henderson, Nevada, this week. They don't get all LA Timesy and bravely call for further study, but they do, in their measured and reasonable way, ask what the hell does Obama think he's going to do?
The topic: $1.5 billion in aid to five states -- us, Florida, Michigan, Nevada, and Arizona -- to help unemployed losers pay their mortgages. The administration's already committed $75 billion to paying banks to rework people's underwater loans. How's that gone?
The administration’s $75 billion antiforeclosure program, which subsidizes lenders to rework bad loans, has been a big disappointment. One reason is that its usual method of modifying loans — lowering the monthly payment by reducing the interest rate — does not work well for jobless and underwater borrowers. Unemployed homeowners often cannot make even reduced payments and underwater borrowers need principal reductions to succeed over the long run, not lower rates.
But this additional $1.5 billion is directly targeted for the unemployed, and here's the NYT's take on that:
In at least a tacit acknowledgment of those issues, Mr. Obama specifically said that the five-state effort is intended to aid homeowners who are out of work and underwater. To help jobless owners, states could use the money for loans to cover mortgage payments, an approach used successfully in Pennsylvania. With unemployment expected to remain high for a long time, Mr. Obama should consider a national program of that kind.
The NYT calls the $1.5 billion too small to make a dent (agreed) but says it's nice, and a step in the right direction. Now, if they'd only get in on the action at CashCall.
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