Tonight is Obama’s first shot at the State of the Nation Address. Many in the Banking industry are watching closely to see what direction Obama is going to go. Clearly the standoff between Obama vs Wall Street & The Banks is a very serious issue. This is the current root of the problem in regards to the economy recovering. Again the issue here is the lost equity and how to address it. Loan modification is an unrealistic option for the banks as it only weakens the Banks on their balance sheets. So what is the answer?
Loan modifications hurt banks. If you lent money to someone with an 85% guaranty why would you reduce that? So if you lent someone $100 and purchased FDIC insurance then your loan would be protected up to 85% of the loan amount or in this case $85 of the $100 is guaranteed. So only a 15% loss is not bad when you consider that most real estate lost more than 50% on average. So why modify a loan and lose the FDIC protection? Would you do it?
It is important that everyone understand this issue as main stream media is not reporting on why the Banks are not modifying loans. Keep in mind that I am a broker that does not like how the Banks tried to blame all brokers for the mortgage meltdown. Fair is fair and this modify issue is not the Banks issue. Why it is a one sided political issue today is unbelievable. The Feds need to own thier side of the problem too! The problem is that would point the finger at some longtime Congressmen such as Barney Frank. This is why I continue to call out the media, where are you guys? Why the double standard?
The answer was presented back in early 2008 but no one was listening. The answer was then and still is the HOPE loan. The HOPE loan would have worked then and will still work today. The problem is that the Bush Administration came up with the HOPE loan program. It would be terrible to give Bush any credit since he is the reason we are all here, or is he? I voted for Obama but I made much more money under Bush. The Bush plan worked great until the wars broke out and the Washington in fighting began. Go figure. After a year of hearing everything is bush’s fault I have heard enough Bush talk. My TV went out a few days ago, is this Bush’s doing? Hardly! If Obama can not begin to take some of the blame then someone in Washington please show him how to mop. Teach Pelosi too! I am a California native and I would love to see her ride out of Washington on her mop.
We have all watched Obama since he has taken office and clearly he is showing signs of stress. I am disappointed that he tells us he understands the common man yet takes a very expensive vacation in Hawaii, trips to New York for plays and fly’s all over the world. Much more than any other president before him, why? Most average people will never make it to Hawaii or a New York for a play so this is odd statement for me. With all of the video conferencing available to us today there is no need for all of the travel or the unnecessary carbon foot print of air force one.
I am interested in the economic direction Obama wants to take us. All of the other issues that Obama has on his agenda are unobtainable for the simple reason that they are flawed. If Heath Care reform does not address Tort Reform then it has no chance. Until this is addressed then Washington is not serious and it is all an act. In any case this is a mortgage blog and Banking, Wall Street, Washington, Obama and anyone in the Mortgage Industry are all spinning our wheels. I hope that Obama does have a solid idea, tonight will tell.
Also Obama does have great charisma but he remains unproven without a teleprompter. Speaking to a sixth grade class with a teleprompter is sad. It is time to speak from the heart. Tell us what you think. Please make it interesting so we do not change the channel. This is not an infomercial for Heather Care but rather your presidency, make it count. Your future and ours is riding on it!