The Obama foreclosure plan has caused a lot of division among the people of this country.   Of, course, there is the giant split between conservatives and liberals.  But, the bigger divide, and the more interesting one, is the one it causes between the needs of renters (prospective buyers) and homeowners

I have a “hunch” that nearly all the people in favor of the mortgage support plan are homeowners and lenders.  Why?  From what I understand, Obama’s plan is to use taxpayer dollars to prop home prices.  The logic is that this action will keep banks and people from having to sell their homes for huge losses.  Or, in other words, the government is stacking the deck against homebuyers, hoping that they will quickly, rush out to buy an overpriced home, thereby “saving” us all. 

Unfortunately, Obama’s plan is likely to fail because it does nothing to correct the overbuilding (supply) and lack of demand that cause prices to drop.   It also does little to help the banks, who have discovered that they can only sell property for what they can get, not what they are owed.   In other words, if the current owner can’t afford their house at anything close what they originally paid, chances are slim that anyone else can either. 

The “housing” bailout hinges on keeping prices high or keeping people in homes they can not afford.   It does nothing to erase the over supply of homes, increase demand, nor does it put more qualified buyer’s in the market.   The bottom line is that the foreclosure plan pits renter against homeowner,  in the hope of keeping lenders in business.  

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