Many Foreclosure Victims Complain that Obama’s Rescue Plans are Unfair

Many of the foreclosure victims complain that the Obama rescue plans are unfair. More attention has been given on helping banks and automobile industry rather than those facing home foreclosures. Other critics say that the plan will rescue foreclosure victims who had purchased houses well beyond their means. Those supporting the plan say that it will put a halt on tumbling house prices and avoid further worsening of the recession.

The debate is raging and stirring up hot emotions as to who are going to be the beneficiaries of governmental plans. For some months this issue is going to be a burning one as the legislators deal with sensitive issues like empowerment of bankruptcy judges to alter mortgage terms.

Kim Guymon is a mother who stays at home and has been regularly paying her mortgage dues. She grumbles and thinks that now she will be paying also for the mortgage of her neighbour. Many people are seeing red.

Robert Bechler is a contractor. He is far from happy by rescuing people the assessment of whose houses have fallen below the loan amount. However he admits that there are few other options left and refers to it as a “necessary evil.”

The plan includes the granting of $75 billion as incentives for the banks and investors so that they bring down the rates of interest of foreclosure victims and also make alterations in the terms of the loan. This money is from the second half of the $700 billion that had been sanctioned during the Bush regime. The target is to see that 4 million borrowers continue to stay in their houses and the free falling of reo house prices is halted.

To be able to get a slice of the pie the lender would have to lower the rate of interest so that the amount being paid by the borrower is not more than 38% of the person’s earnings (pre-tax). The government would then proceed to bring the ratio lower than 31% by making up for the gap. Another clause is for those borrowers who are current in their payments but are keen to refinance to lower affordable rates.

The Republicans immediately came down harshly on these plans for being an insult to the principles of free market and also charged that this would lead to irresponsible borrowing. Rep Jeb Hensarling (Republican) quipped, “Nice guys finish last.” Columnist David Brooks said this was “Money for Idiots.”