The Obama administration is poised to announce YET ANOTHER initiative to stem the tide of foreclosures in the United States.  So far, all of their efforts have been unmitigated failures, and the latest one will directly damage one of the most important segments of the investment industry:  Real estate mortgage note investors.

Today’s initiative is truly horrendous.  According to the Washington Post:

Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be the amount of unemployment insurance, for three to six months.

There are many problems with this, not the least of which is that many of those banks and “lenders” are normal people just like me and you who sold property by taking back a note.  And now, the federal government is aggressively aiming to put a stranglehold on these businesses and investors.

Did you know that there’s a substantial niche of the real estate investment industry whose primary mode of investment is to buy and sell real estate notes?  Obama’s new plan screws these people directly without any regard to how it effects real people.  This president is so fully opposed to business – both large and small – and this latest initiative is yet another example.

So think of it this way:  Let’s imagine that there’s a retired couple named Mr. & Mrs. Smith.  The Smiths are in their 70′s and they have bought and sold a few homes over the years and now they have 3 different mortgage notes paying them each month.  These notes bring in an average of $850 per month for a total of $2,550 per month.  This is the primary way that the Smiths pay their bills each month.  And imagine that two of their buyers experience some financial trouble.  Now understand that the Smiths have been in this business for many years, and they understand that they’ll sometimes have to foreclose and take back properties.  They don’t want to do it, but they must because it’s their retirement income.  But they won’t be able to do so under Obama’s plans.  Instead, they’ll have to take a drastically reduced amount of money from those two buyers for up to 6 months.

If the payments for these buyers are reduced to, for example, $350, the Smiths will have their retirement income reduced by $1,000 per month, leaving them unable to pay their own bills.  Then, they’ll probably still have to foreclose the buyers, because Obama’s own loan modification programs have clearly shown that only half (at most) of all loan modification efforts result in permanent resolution for the home buyers.

So the net result is that the Smiths, whose only “crime” is to plan for their retirement by taking back real estate notes, are unable to meet their own financial obligations.  Now multiply that same result by the millions of privately held mortgages in the United States, and you’ll begin to get some clarity about the damage this new policy can inflict – and it’s 100% because of policies established by the anti-small-business president Obama.

It’s not right.  I guess “Hope and Change” are Obama’s words for “Takeover and Tax”.

I fully expect the Obama brainwashee’s to respond to this post by demonizing the bigger lenders.  Who cares.  Those guys can take care of themselves.  But keep your eye on the ball:  This president is hurting individual people who don’t deserve it – and he’s doing it on purpose.

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