As Barack Obama’s 2009 economic stimulus plan makes its way through Congress, the Senate is taking the opportunity to modify the bill with the intent of providing assistance to the lagging housing market. Rather than allow the market to continue correcting itself, the government would like to encourage consumers to jump into the market, allowing prices to begin climbing again.
Republicans and Democrats in the Senate would like to see 30-year fixed-rate mortgages at 4%, improvements to the first-time home buyer credit, and a 90-day moratorium on foreclosures.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters last week that he would like a provision in the stimulus package that would impose a 90-day moratorium on foreclosures. Dodd may consider other housing measures as well. (CNN)
People facing foreclosure are unlikely to qualify for a typical mortgage refinance, a tool for those who have been able to pay their monthly bills but who would like to take advantage of lower rates. A 90-day moratorium would give those in danger of losing their homes more time to negotiate with lenders. There are some instances in which this might improve the situation.
I can imagine that someone who has been out of work and unable to pay the mortgage — usually the last payment to be affected when an emergency arises — could be given more time to find a new job. But in this economy, is three months enough time for someone to get back on his or her feet?
The goal of economic stimulus is to prevent another Great Depression or a repeat of Japan’s extended slump during the 1990s. The theory seems to be for the government to throw everything it can at the economic downturn, including the kitchen sink, and see what sticks.
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