The Obama administration’s new proposal on housing had many cheering because it seemed like an important departure from the zombie-housing market solution of propping up prices that has been national policy since 2007. Instead, the Obama administration seemed to be proposing a plan aimed at helping banks and borrowers adjust to the reality of lower prices.Unfortunately the program may be another head fake, Shahien Nasiripour reports for the Huffington Post.
At a background briefing Monday afternoon, a senior Treasury Department official indicated that the department is headed in the direction of writing down mortgage principal more often — the one thing underwater borrowers need the most. Market observers and consumer advocates have long been calling for such a shift.
But hours later, Treasury spokesman Andrew Wiliams e-mailed the Huffington Post: “Treasury is NOT poised to roll out a major principal write-down program. As the [official] said, we are looking at a number of tweaks to existing programs to help reach more borrowers.”
In other words, this might end up in the ash heap of ineffective small programs launched by the administration with much hype but little effect.