It is with great fanfare that President Obama will roll out his new plan to help keep struggling homeowners from going into foreclosure. His $1.5 billion program will provide block grants to states in which housing prices have dropped 20 percent from their all-time highs. Thus, only homeowners in Nevada, California, Arizona, Michigan and Florida will qualify.
Housing finance officials in those states will be able to use their block grants, upon receiving approval from federal officials, to help unemployed homeowners or provide assistance with new home purchases or mortgage modifications.
Speaking of mortgage modifications, the new program being launched today has only 2 percent of the funding given to Obama’s $75 billion mortgage modification program in which banks were supposedly paid to help the very same homeowners stay in their homes. According to reports out this week, that program has only given 20 percent of the nation’s reported 4 million struggling homeowners any assistance, which is probably why this new program is needed in the first place.
The fact that Obama thinks he can help a large number of homeowners in the five hardest-hit states with the very mortgage issues a program that cost 50 times as much was designed to resolve means either that the first program didn’t need that much money or that the banks who profited from it didn’t use their profits to help any American not employed by a bank.