Another Failed Plan

Is it a coincidence that President Obama came to Mesa Arizona, one of the hardest hit housing markets in the country, to give his pitch on the new The Homeowner Affordability and Stability Plan, or was it the weather, or just a gross lack of judgment and/or understanding of just how bad the housing market is for so many homeowners? For us in Arizona, it was just a slap in the face.

I watched the speech on TV, as did millions of Americans. I heard all those in attendance clap and cheer the new Plan; giddy over the prospects that their home would be saved. Relief was on the way. Initially I too was excited over the new mortgage opportunities and refinance business we in the mortgage industry would likely produce with this new Plan. We can now refinance homeowners who are upside down on their homes; all the way to 105% of the value of the home. Unfortunately Mr. President, in the last three months of 2008 the S&P Case-Shiller National Home Price Index reported that prices sank a record 18.2% nationally; Phoenix metropolitan fell a whopping 34%. California and Nevada experienced a similar drop in home values. Just who was the new Plan going to help?

Since President Obama’s speech in Mesa, Arizona a few weeks ago, I have been inundated with calls for help under the new Plan. To date, we have refinanced exactly 0 home owners under the new Homeowner Affordability and Stability Plan. Yesterday I took an application for a home owner who hoped to qualify under the Plan. The home was recently purchased for $175,000. Today it would be lucky to appraise for $95,000. What about them President Obama?

The Homeowner Affordability and Stability Plan will likely be another failed attempt, as was Hope for Homeowners before it, of offering any relief to homeowners that are underwater. Please President, if you are going to roll out a plan for homeowners that are in trouble, let it be one that actually can helps those in states like Arizona, California, Florida, and Nevada; the states that need it the most. If not, please stay focused on buying Treasurys and mortgage back securities. That at least helped rates, and may eventually help the flow of credit. That will provide some relief today; and our children can pay for it later.