Clinton focuses less on the economy and more on borrowers. Her plan, while expensive is the most focused on getting borrowers relief.
The Democratic race continues to be fierce, while the Republican nomination is already decided. One of the hot issues being thrown around the election this year has been the mortgage crisis. Candidates have proposed a variety of economic stimulus packages and mortgage reforms, but just who has the best mortgage plan? Looking at the issues, it’s simply too hard to tell.
Hilary Clinton
All of the candidates support a need for some kind of economic stimulus; however, the implementation of this stimulus looks very different. Starting with the most generous $70 billion plan, with generous being both good and bad, Hilary Clinton proposes a 90-day freeze on subprime foreclosures, and an automatic rate freeze plan for up to five years. Furthermore, of the $70 billion plan, $30 billion would be put in an Emergency Housing Crisis Fund to assist states and cities to mitigate the effects of mounting foreclosures.
Economic Stimulus Plan Pros
Plan provides the longest foreclosure freeze and abatement plan, as well as provides funds for cities to maintain vacant houses. This keeps property values higher and eases the burden on many states and cities in need of serious help. Many foreclosed neighborhoods get caught in a terrible downward spiral. This funding provides a way out. Additionally, this funding would mean lower municipal taxes and more jobs in the areas of need of economic stimulation.
The 90-day freeze on foreclosures would help everyone. The legal system is backed up with foreclosure cases, banks need more time to work out loans and three months will be enough time for at least some people to save their homes. Freezing interest rates for five years ensures borrowers will at least have an opportunity to refinance if they can afford their current rates. It would also stem the tide of foreclosures into the market.
Economic Stimulus Plan Cons
Expensive and wasteful. Putting $30 billion in the hands of state and local governments would more than likely result in $15 billion or less getting to people who really need it. Additionally, taxing everyone to fix the problems mainly in Florida, California, and Nevada seems unfair. It is also important to note that putting $30 billion of taxpayer funds toward dealing with the problems caused by foreclosure mutes the argument of bailing out homeowners. Unfortunately, it still focuses a very small part of the overall population.
While a 90-day freeze on foreclosures would help the system, what about the flip side of the rate freeze equation? Banks have to hold loans on their books that could see a tremendous drop in value as interest rates increase. For many banks this could spell the end. Additionally, if this were permitted banks would be forced to charge much higher interest rates to recoup their losses and as a general measure of risk protection. In the long run this legislation would hurt all future homeowners. Five years is simply too long.
