PHOENIX – Troubled home “owners” breathed a collective sigh of relief today after President Obama signed a new multi-billion dollar federal entitlement program aimed at mortgage relief into law. The program rewards millions of home “owners” whose stupidity and/or greed prompted them to purchase homes hopelessly beyond their ability to pay and then use them as credit cards to finance SUVs, steak dinners, junkets to Las Vegas and other essentials of modern life.

The new welfare program will bail out home pseudo-owners in a number of ways, all of which are intended to put a halt to foreclosures, otherwise known as personal responsibility.

The most striking and innovative aspect of the plan is the decree by Obama that troubled home “owners” should never have to pay more than 31 percent of their income on housing, regardless of the terms they agreed to or how much of a balance remains on their mortgages. The cap is coupled with new interest rate controls by the federal government on an “as needed” basis, although Obama has said he prefers 4.0 percent to be the “going rate.”

In prepared remarks today in Phoenix, the president said, “Let’s say you earn about $30,000 per year and you find a house that costs $232,500. 31 percent of your monthly income would be about $775, which puts you in a nice comfortable 443-year mortgage at an interest rate of 4.0%, which is fair for someone like you. You win, the banks win, and most importantly, the economy wins.

The Gump family is looking forward to taking advantage of their 570-year mortgage

“Meanwhile, let’s say a person who makes $20,000 per year wants to buy a million-dollar home. Now in that circumstance, the Guaranteed Interest Payment (GIP) doctrine clause in my plan really comes in handy. Under my cap, that person could only be expected to pay $516.67 per month on his or her mortgage, which means he or she would be looking at a very manageable 572-year mortgage at a 0.6 percent interest rate.

“The real message of my plan is that the government is here to help no matter what. If it’s not happening with the denominator, I say let’s fix the numerator.

“Sometimes, stretching your payments out to a point well beyond your lifetime just isn’t enough, though, thanks to the laws of mathematics, although we’re looking into changing them, too.  That’s why the GIP doctrine is so important, because it allows us to set individual interest rates at whatever number is required to keep consumers’ payments at 31% of their income.

“As the ability of the homeowner to pay decreases or as his or her needs increase, such as wanting to live in a better home, naturally, the level of assistance and government intervention will go up.”

When asked how the banks can hope to recoup their investment on such mortgages with controlled interest rates and when people’s lifespans are well below 100 years, Obama said, “By the time the homeowner dies, the value of the house will have appreciated thanks to my stimulus package, and the banks can pocket whatever that profit is when they take the estate into foreclosure. That’s fair.”

Critics called the program a danger to the U.S. banking system and to the concept of a free-market economy in general. Unilateral Briers, an economist who specializes in the housing market for the Halyard Rave academy, cautioned that the plan could serve as an incentive for people to stop working. “What is 31% of zero? No job means no need to make a mortgage payment.”

While a spokesperson for the Obama administration acknowledged that under the plan, those with no income would indeed be exempt from making any mortgage payments and protected from foreclosures, he insisted even this would not harm banks.

“Eventually, even people making no mortgage payments have to die, so it will be just like those with the 400-year mortgages. By the time they die, houses will have appreciated and the banks will enjoy some degree of profits. We have to get beyond this antiquated concept of punishing people for their mistakes.”

Originally posted 2009-02-18 19:59:39. Republished by Blog Post Promoter