I’m very glad that the chairman of the Federal Reserve thinks the economy needs a stimulus package. Yep, the idea of a potential tax rebate check is a great thing for those of us who are having trouble meeting that monthly gas bill or paying for the sundries at the Stop and Shop.
But what in the name of credit crisis, Batman, does that have to do with the fundamental cause of the spiral in this current economy?? I’m talking, you guessed it, about my little beat: housing.
Not only will 600 bucks not make a particle of difference for a homeowner stuck with a mortgage rate that just reset from 2 percent to 8 percent, nor for a potential home buyer looking for that little extra bit of courage to jump into a contract for a brand new home.
Until the housing market stabilizes, builders start building again, and home prices find their feet beneath them, consumers aren’t going to budge, and I don’t just mean buying houses. I mean spending money on houses and the things that go into them.
At the same time as the Fed Chairman was using all that blunt language about a stimulus package, I received a new study from the mortgage bankers in my email box. It reports that “the mortgage industry modified an estimated 54,000 loans and established formal repayment plans with another 183,000 borrowers during the third quarter of 2007.
By comparison, foreclosure actions were started on approximately 384,000 loans.” So the mortgage industry is trying, and stemming the tide, but certainly not all of it. 62 percent more loans went into foreclosure than were modified. And despite all these efforts, by the industry and the federal government, the ratings agencies continue to downgrade the value of mortgage securities, causing massive losses on Wall Street.
I’m not saying I’m on the side of a government bailout, because I’m actually not. I’m a homeowner who actually read the terms of my mortgage, and questioned my lender over and over on each point. But if the government is going to step in, how about coming up with something better than a little post-Christmas cash that won’t even buy a month’s worth of groceries for a family of five.