Will the housing plan offered by President Barack Obama this week be enough to overcome the housing downturn? Some big guns in the world of economics have doubts.
The plan seeks to stem foreclsoures by helping home owners who are still current on their mortgage but at risk of defaulting. (For more details: Read What's in the Foreclosure Plan)
"It's a positive step in the right direction," says economist Mark Zandi of Moody's Economy.com. "I think it will be much more successful than those that preceded it. I worry that it's not going to be successful fast enough."
Likewise, Dean Baker, a housing specialist with the Center for Economic and Policy Research, said: "I'm not impressed. There are some good things in there. I think giving servicers incentives is a good thing. But it's mostly money for banks, not money for home owners. … The banks still decide who gets into this, and that's been a problem all along."
Patrick Newport, an economist with IHS-Global Insight, is also skeptical. He pointed out that the number of people who are underwater on their mortgages has risen to 15 million, but the Obama initiative aims to help only 7 million to 9 million,
"Obama's plan is an ambitious one, more ambitious than analysts had been led to expect," he says. "Whether it will stop the bloodletting, however, time will tell.”
Source: Los Angeles Times, Maura Reynolds (02/19/2009)
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