There are 2 parts to it; the first is to work with lenders to modify loan terms for millions of homeowners; and the second is to help homeowners refinance to fixed-rate loans that are affordable.

The program, according to a Treasury Department official (as quoted in this article on Yahoo News) is  “not intended to prevent every foreclosure or to help every homeowner.  It’s really targeted at responsible homeowners.”

People who are eligible, and it’s only people whose loans are backed by Fannie May and Freddie Mac have the chance to qualify.  Also, people applying for the program will have to provide their latest tax return, 2 pay stubs and an affidavit of financial hardship.

The program is set to run through 2012 and people can only have their loan modified once; it’s only for loans taken out January 1, 2009 or earlier; and is only for single family properties worth $729, 750 or less.

People could get a rate as low as 2 percent for five years; then it would go to about 5 percent until the mortgage is paid off.

What’s the cost for this?  According to an article on the Washington Post website it’s about $75 billion.

The good news is that millions of people should be able to get help with their overwhelming mortgage payments.  The bad news is that only half the people who need the help will get it.  The really bad news is that anyone who has been able to make their mortgage payments and is current won’t get any help at all, but they’ll be expected to help pay for the cost of the program – all Americans will.

And the worst news is that there is no guarantee it’s going to work.

I’m not saying I’m the smartest person in the world and I won’t pretend to understand everything about how the economy works.

But, wouldn’t the economy have been stimulated if every American taxpayer had been given $20,000 directly to spend?  That would have put a lot of money into the economy and there wouldn’t have been implementation and monitoring headaches that programs like this mortgage relief one are sure to have.

He also says that the United States has faced bigger economic challenges than the one we’re currently facing, including 2 World Wars and the Great Depression of the 1930’s.  “Though the path has not been smooth, our economic system has worked extraordinarily well over time.” It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead.”

Buffet’s letter is a “good news/bad news” statement.  Yes, the economy stinks right now but that doesn’t mean it’s time for all of us to give up.

We’re stronger people than that.

It’s time for us to “buck up,” deal with the mess we have, and to stop panicking.

If I had one wish for the United States right now it would be for the media to stop publishing so many “gloom and doom” stories.  It’s freaking people out and the last thing people should be doing is making financial decisions when they’re scared and panicked.

Not everybody is losing their job (more than 90% of people are employed).

Not every company is losing money (Walmart had a 4 percent rise in profits in the 4th quarter of 2008).

Not every company is cutting hours or laying off people (CNN Money recently published a list of 20 companies that are hiring at least 350 people each).

I’m not pretending to be Pollyanna and saying everything is “peachy keen.”

It will take time for the economy to bounce back.   There were some bad mistakes made by the financial industry over the last several years, the most glaring one was giving mortgages to people with very shaky credit and giving loans for up to 125 percent of the value of homes.  That was just a disaster waiting to happen…..and now it has.  Like it or not, we’re all going to end up paying for that mistake.

The best thing you can do for yourself in this current economic climate is to take care of your personal finances the best you can so that you can weather the storm we’re currently riding out.  That means, starting today, living within your means and paying off your debt.

That’s what I’m doing.

It makes sense doesn’t it?  Less debt means less bills to pay which means a personal financial downturn that might show up in the form of reduced wages at work, reduced hours at work, the loss of a job, and investment losses, will be easier to weather.

I won’t join the sea of negativity about how it won’t work because I don’t have a crystal ball and can’t predict whether or not it will work. I also won’t get into specifics about it because there’s so much conflicting information about it right now and I’m not sure the people who passed it even know what’s in it because it’s so large and cumbersome.

I will say that I don’t think it’s right for our government to take on staggering amounts of debt without letting the people vote on it and without letting the people help decide how and where that money will be spent. If every American has to help pay back that debt (and we do) then every American should have a say in how much debt is taken on and how it is spent.

I’m an elected official with a small rural municipality (a tiny little worker bee in the American political system). If our municipality wants to increase the money we spend by more than 2 percent in any given year we have to, by law, put that to a vote and let the people who will have to foot the bill say yeah or nay to it.

Why is it different for the National Government? Why are they allowed to take on a staggering amount of debt without the American people being able to vote on whether or not they want to take on the job of paying it off?

It’s like being forced to pay for a mortgage for a house you’ve never owned or lived in or having to pay for a car that will never be yours to drive or to even look at.

Will every American see some benefit from the stimulus package? Will any benefit they see be worth the cost? That definitely remains to be seen.

To me, if it stimulates the economy to the point of Americans being able to pay off the debt without undue hardship and allows us to not leave our children with a budget deficit to pay, then yes, it’s worth taking on this debt and working hard to pay it off. Spending like that can’t go on unchecked though or our children’s children will never see a balanced or surplus budget.

President Obama seems to be aware of this and has addressed the subject. He spoke to the American Governors earlier this month and said “We cannot and will not sustain deficits like these without end … We cannot simply spend as we please and defer the consequences. I refuse to leave our children with a debt they cannot repay.”

He went on to say he would reinstate the “pay as you go rule” that created a $236 billion surplus in 2000. “You don’t spend what you don’t have,” he said. “This is the rule that families across the country follow every day.”

That’s the spending rule I now follow. I sure hope President Obama keeps his word and makes the government abide by it as well, starting now.

Followup

When we updated the site, we weren’t able to bring all of the old comments into the new system, but this one was good so I wanted to make sure it came along – this one is from Buddy:

Hello

I want to say a bit about this spending plan that Obama put together. I am angry about it. He pushed it and pushed it saying that it was dire that it be passed immediately. The Congressman who voted upon the bill didn’t even get a chance to read it before they were made to vote on it. And then after it was passed, and after all the hoopla about how it had to be signed now, he waited for a few days so he could fly to Denver Colorado and sign it on top of some Green energy building,with a great big huge ceremony.I don’t like any part of the stimulus bill and I don’t agree with his policies on having it signed.

One of the reasons that we as a people don’t get to vote on these big projects is because we have elected officials that vote for us. This is why it is so critical that we all get out the vote and put people into those seats that we can trust. We are living in a republic not a democracy. In a republic elected official are supposed to “do the will of the people who put them there” but it isn’t a requirement. They can vote anyway that they see fit. If this were a democracy then I believe that we all would have the ability to vote on these matters. But it isn’t,this is why I say it again it is so important that we put people into those positions that we can trust. I hope that I helped you to understand this a bit.

Cheers