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Considering how much detailed coverage the networks lavished on the President's foreclosure prevention plan--and the opposition to it from so-called cable ranters--when it was unveiled two weeks ago it should come as no surprise that all three newscasts again selected it as their lead when the Obama Administration "rolled out the fine print," as ABC's Betsy Stark put it. Yet seeing that the fine print contained very few details that had not already been covered at the time, it is only appropriate that all that odorous pork should have nosed out foreclosures as Story of the Day.
As Barack Obama had announced, the foreclosure plan has two aspects. For those homeowners whose mortgage is held by FannieMae or FreddieMac, who are not behind in their payments, but whose home is worth less than the principal the owe, refinancing will now be permitted "even if the home is worth as much as 5% less," Diana Olick, CNBC's real estate correspondent, told us on NBC. For those who are in danger of default, the Treasury Department has a $75bn fund to subsidize a renegotiated loan to bring down monthly payments. If the bank lowers interest rates and extends the term of the note to get the payment schedule as low as 38% of the borrower's gross income, the federal subsidy will lower the payment further to 31%. "The whole program needs no approval by Congress. It starts now," CBS' Chip Reid declared. ABC's Stark warned that it "will not help people facing foreclosure because they lost their job."
Drowning jokes aside, generally speaking, what is wrong with living in a house that is underwater, as the saying goes, with more principal owed than its market value? CBS' Ben Tracy answered from a Los Angeles neighborhood, where Aaron and Jessica Jenkins bought their house in 2005 for $700K. It is now worth $350K on which they owe $540K, making them ineligible for the FannieMae-FreddieMac portion of the President's plan. The couple is at no risk of foreclosure. They can make their payments as long as they stay. Their situation "really matters when you need to sell…You are under water. You lose your job. You need to relocate to find work. You are stuck."
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