Steps that are proposed to ease the financial pain of the American people seem to follow a well-defined path. The President makes an eloquent speech announcing an initiative in general terms. Even without specifics, the idea is debunked by critics usually on the right, but occasionally on the left as well. The details are released, or a piece of legislation is introduced and it is pronounced dead on arrival.
At first blush, this would seem to be the case with the mortgage refinancing plan that Obama unveiled during the course of his State of the Union message. It was criticized before it was seen, and when the enabling legislation was introduced, most commentators simply assumed it would go nowhere. But if you read between the lines, you will discover something very different—and that difference exposes a most interesting philosophical dichotomy rarely found in the workaday, sound-bite world in which we live.
The proposed new program is well thought out. There is to be no reduction in the principal amount of the mortgage, but FHA-guaranteed refinancing at today's amazingly low rates would be permitted for anyone who wanted it, so long as they had a minimum credit score of 580, and an existing mortgage with a principal amount within the FHA's limits ($271,050-$729,750). Borrowers would also have to be current on their mortgage payments for at least the last six months, and have not more than one delinquency in the six months prior to that. The program is estimated to cost between $5 billion and $10 billion, paid for with new fees on those financial firms that have more than $50 billion in assets. As far as it goes, this is a terrific plan, balancing many competing interests and spreading the costs around pretty effectively.
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