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Housing Questions Go Unaddressed in Obama Speech

President Obama’s widely praised speech last night laid out the goals of his new housing plan and emphasized the government will help responsible homeowners. But it still left a lot of concerns unanswered, says Sean O’Toole, president of ForeclosureRadar.com, a California firm that tracks foreclosure data. Via Mortgage Insider, here’s O’Toole’s reaction:

Finally he has to be kidding on the housing plan. $2,000 savings per year? So little of his speech is about housing. They clearly don’t get that the $4T in bad mortgage debt hanging over this nation’s head is the reason consumer confidence is so low. Nothing new on this front tonight… and the loan mod and refi plans announced earlier are warmed over versions of plans that have already failed.”

O’Toole also raises a point I’ve mentioned before – why are we encouraging people to spend and take on more debt?

From O’Toole:

Has it not occurred to anyone in Washington that too much debt is how we got into this mess? Isn’t too much debt the reason we have low consumer confidence? To restore confidence don’t we need a realistic plan to reduce household and national debt? Instead the focus is on the need for more debt – nothing more important than to get credit flowing.

Why give banks taxpayer money to get credit flowing? Wouldn’t it be better for taxpayers to keep their money and not pay interest to failed banks on their own money. Worse we are going to borrow that money just to make sure we pay twice. Pretty insane if you think about it.

O’Toole’s insights are interesting if you like to get down into the weeds of housing and credit issues. So much has been made about the populist backlash against any help for homeowners. But as O’Toole points out, the Obama administration’s plan is pretty limited in scope. It doesn’t force lenders to write down loan balances, nor does it break through the logjam of investors refusing to sign off on loan modifications. So its impact probably will be much smaller than the fuss being made over it.

Still, Obama struck all the right notes in the speech in talking about housing — such as how people are underwater on their mortgages, how the government can help with refinancing, how the plan is not aimed at people who bought bigger houses than they can afford. The details don’t really make for a good speech — but in the end, they are what will make or break the plan, regardless of how eloquently its goals are described.

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