President Barack Obama's plan to allow homeowners owing more than their houses are worth to refinance will create a credit crisis down the road, says Peter Morici, a professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission.
The program seeks to prevent foreclosures by allowing homeowners still current on their federally guaranteed mortgages to refinance even if their home values have dropped below what they still owe.
"That is a prescription for more failed loans and another crisis in mortgage finance down the road or huge losses for U.S. taxpayers that can only be accommodated by even bigger deficits and printing money," Morici writes in a RealClearMarkets column.
Other outlets have reported that there are to be no credit checks, no job or income check and no apprasials. The only requirement is that the mortgage payments be current. No matter that credit cards may have been maxed to accomplish this. This sets the scene for a real horror show!
I learned early in life that at times it is best to cut your losses and take whatever lumps you have coming.
These are signs of a desperate president and a desperate political party.