As reported in Wednesday’s Marietta Daily Journal, the president announced reforms meant to help revitalize the residential real estate market, which has been in the tank since 2007 or so. Obama’s plan is modeled on reforms suggested in the Helping Responsible Homeowners Act co-sponsored by Isakson and Sen. Barbara Boxer (D-Calif.).
“We’ve been working on him to adopt it because it is adoptable by the agency (the Federal Housing Finance Agency) without having to have a statute,” Isakson said.
The proposal has two aspects. The first would eliminate risk-based fees now charged to homebuyers on loans for which Fannie Mae or Freddie Mac are already bearing the risk.
“It just pays attention to those people in America who are making their payments, playing by the rules, trying to ride out this recession and protect their largest investment, which is their house,” Isakson said.
The second would remove refinancing limits for properties whose owners are “underwater” — that is, who owe their mortgage lender more than their home is worth.
“That’s less money out-of-pocket for your payment every month, which is more money in your pocket, which helps the economy,” Isakson said.
There could be as many as two million homes in Georgia eligible for such refinancing, and millions more across the country, Isakson told The Wall Street Journal.
“We’ve got an obvious housing problem, but we also have an awful lot of Georgians who are playing by the rules,” Isakson said. “They’re making their payments. They’re not getting behind even though their houses are underwater. Everybody has been trying to throw money at people who were behind and weren’t making their payments, and the people that were making their payments to stay in their homes are the real heroes through this recession, trying to at least contribute to stabilizing the housing market.”
These proposals by Isakson and Boxer, which Obama was wise to adopt, won’t in themselves cure the economy. But inasmuch as the residential real estate market is one of the key “drivers” of the economy, there is unlikely to be a full-scale recover until that market is back on its feet. And the Isakson/Boxer/Obama effort lends a needed hand to that market.
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2. Isaakson voted FOR the Bailout!
3. Isaakson is now part of the problem NOT the solution.
Driving the huge number of foreclosures are:
1. The crisis is foreclosures but Isakson has done nothing to curb it.
2. Unemployment and wage stagnation. If incomes of average Americans were rising, they'd be much more likely making their payments.
3. Isakson thinks it's ok for lenders to offer (steer customers to)mortgage loans called, stated income (aka liar loans). The originator tells the borrower not to worry, just say your income is this amount and we'll be able to lend you the money for this lovely house that you can't really afford. The originator says, don't worry about it, your income will rise and before you know it, that payment will not seem so big. It's fraud. Isakson should call for investigations and demand accountability.
4. Our homes wouldn't be underwater if Isakson had regulated derivatives. It was the multi-trillion dollar, completely unregulated derivative gambling that crashed the credit markets in 2008. These highly leveraged instruments remain unregulated, thanks to Isakson. It was Isakson (with lots of help) who gave us the Commodity Futures Modernization act that included the "Enron Rule". Yes, that's where derivatives came from. He also was there when Washington handed Wall Street the license to gamble. They also removed the barrier between commercial banks and investment banks. Again, he has done nothing to correct the damage he's done to this system.