Obama Mortgage Refi Plan Makes a Dent in Foreclosure Crisis

Feb. 11, 2012— -- I am a New Yorker. I am a Giants fan. They made my day last Sunday. Sorry, Gisele.

Like over 100 million of you, I saw the Chrysler commercial and, for the record, Clint Eastwood made my day.

Now, in the interest of full disclosure—my college flame was the granddaughter of a famous Chrysler design engineer—so I confess that I have a warm spot in my heart for those guys, but that said, how can you not appreciate the concept of "This is not a country that can be knocked out with one punch?"Isn't that what we Americans are all about?

So I think it's high time for us to decide whether better days or bitter days are ahead. I, for one, cast my vote for better days.

Unfortunately, there are those "nabobs of negativism" who would promote the "end of days" when it comes to our economy and the Obama Administration's efforts to continue to pull us out of the fiscal bonfire that has consumed this nation for the past five years.

Steps that are proposed to ease the financial pain of the American people seem to follow a well-defined path. The President makes an eloquent speech announcing an initiative in general terms. Even without specifics, the idea is debunked by critics usually on the right, but occasionally on the left as well. The details are released, or a piece of legislation is introduced and it is pronounced dead on arrival.

At first blush, this would seem to be the case with the mortgage refinancing plan that Obama unveiled during the course of his State of the Union message. It was criticized before it was seen, and when the enabling legislation was introduced, most commentators simply assumed it would go nowhere. But if you read between the lines, you will discover something very different—and that difference exposes a most interesting philosophical dichotomy rarely found in the workaday, sound-bite world in which we live.

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The proposed new program is well thought out. There is to be no reduction in the principal amount of the mortgage, but FHA-guaranteed refinancing at today's amazingly low rates would be permitted for anyone who wanted it, so long as they had a minimum credit score of 580, and an existing mortgage with a principal amount within the FHA's limits ($271,050-$729,750). Borrowers would also have to be current on their mortgage payments for at least the last six months, and have not more than one delinquency in the six months prior to that. The program is estimated to cost between $5 billion and $10 billion, paid for with new fees on those financial firms that have more than $50 billion in assets. As far as it goes, this is a terrific plan, balancing many competing interests and spreading the costs around pretty effectively.