Obama's Housing Plan

It seems that $75 Billion of the TARP money will now go toward people trying to get out of foreclosure. The only bad part is that it doesn't address what will happen to people who are seriously underwater in their homes.

"It seems to offer little help to borrowers whose loan exceeds their property value by more than 5 percent," he said, noting that that requirement would limit the plan's success in some of the hardest-hit areas in California, Florida, Nevada and Arizona and parts of the East Coast.

Indeed, Obama himself said, "This plan will not save every home."

The goal is to lower many endangered homeowners' payments to no more than 31 percent of their income. But that depends on a high degree of cooperation by lenders who have been increasingly wary of new lending as the crisis has deepened.

The other bad thing is that it is voluntary so the banks don't have to participate if they don't want to. They should have made this a sting-attached to the TARP money instead of limiting executive pay. They could have forced any new TARP money be set aside to reduce homeowners mortgage payments to 31% of income.

Or they could have put some kind of loan renegotiation incentive into the "stimulus" bill. Perhaps allow the bank to sell the now renegotiated loan to Fannie or Freddie in exchange for some kind of tax consideration or tax holiday or something.