Tags: President Obama | program | beleaguered | homeowners | mortgage | relief | failed

Experts: Obama’s Mortgage Relief Program a Failure

By    |   Tuesday, 05 Jan 2010 09:29 AM

President Obama’s program to give beleaguered homeowners mortgage relief has only exacerbated problems, experts say.

That’s because the $75 billion plan, begun in February, merely delays the day of reckoning for housing market participants, the experts tell The New York Times.

Those participants include homeowners who are in houses they can’t afford, and banks that are reluctant to declare losses on soured mortgages.

Experts say the administration’s program puts off the pain that is necessary for future gains in the housing market.

“The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis,” Kevin Katari, managing member of hedge fund firm Watershed Asset Management, told The Times.

“We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway.”

Until banks own up to their losses, home prices won’t drop low enough to revive demand, Katari says.

Mark Zandi, chief economist at Moody’s Economy.com, tells The Times that the administration should shift its strategy to address the 15 million homeowners who are underwater.

That means they owe more for their mortgages than their homes are worth.

Yale professor Robert Shiller says the crisis will soon spread to homeowners with good credit.

“There will be continuing foreclosures, and not just subprime, it will be prime mortgages,” he told Bloomberg.

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President Obama s program to give beleaguered homeowners mortgage relief has only exacerbated problems, experts say. That s because the $75 billion plan, begun in February, merely delays the day of reckoning for housing market participants, the experts tell The New York...
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