Michelle Fry is a suburban Atlanta homeowner who has seen the value of her modest one-family home drop by more than half in the past year. She now sees a national mortgage bailout plan that appears to reward people who bought more house than they could afford and can't pay their bills. And she has a simple question for President Obama:
"Why am I paying for them?"
"We are very frustrated and scared," said Fry, 32, a newly expectant mother who works as a creative director for a public relations firm. Her husband Sam, 38, is a truck driver for a local printing company. Their combined household income is less than $100,000.
"My husband and I always discuss, 'Why do we try to better ourselves, when it seems if you do nothing, you get all the help in the world?'” she said.
That kind of frustration is being expressed at dinner tables throughout the country. Middle class homeowners who worked hard, played by the rules and paid their mortgage bills and taxes on time are wondering out loud whether the government is interested in helping them, too.
Their frustration is justified, said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. But the economic risk of letting millions of homeowners default on their mortgages leaves the government with little choice.
"A year ago I would have been appalled at this plan," Green said. "Now I think we have to do something like this. The moral hazard argument is valid, but is trumped by the macroeconomic situation."
Obama's plan, which he announced on Wednesday, would provide $75 billion in incentives to mortgage lenders to refinance homes in danger of foreclosure. Another $200 million would be spent to shore up Freddie Mac and Fannie Mae, the two large government-controlled entities that back residential mortgages.
The plan would help 8 to 9 million mortgage holders -- a fraction of the approximately 50 million mortgages outstanding, according to Patrick Newport, a housing analyst at IHS Global Insight.
"The 40 million who aren't going to benefit from this will feel some resentment, because they are current on their mortgages and made good decisions," he said.
The president took pains to defend his plan against critics who say it bails out irresponsible buyers who spent more than they could afford.
"The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly," Obama said. "It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford."
But those assurances are little consolation to Danny and Sara Jovic, who own a condo in Delray Beach, Fla.
They bought their home for $275,000 in April 2006, putting 20 percent down and getting a fixed-rate, 6.25 percent mortgage to cover the rest.
Now their condo is worth only about $175,000, putting the two-income couple among the millions of homeowners whose mortgages are now "underwater" -- meaning they owe the bank more than they can sell their house for.
Their condo association has already whacked them with a one-time fee of $500 to make up for other homeowners who were foreclosed. And their monthly fees have gone up permanently by $100. That's a tough nut to swallow for Jovic, 30, and Sara, 28, whose combined income is between $80,000 and $90,000. They are thinking of starting a family, but they are unsure given the volatile economic times.
"I think the government should help people like me, or the bank should be willing to adjust the loan fairly -- at least make it based on market value now," Jovic said.
Green says the majority of Americans can be forgiven for holding their noses when they look over Obama's plan, but they should accept it nonetheless because it will help those who are in trouble through no fault of their own.
The plan will help millions of people who bought homes they could afford but now are unable to refinance or make payments because they lost their jobs.
"A decent number of these people have been completely responsible and have had the world come crashing down on them,” Green said.
And if the plan succeeds in bolstering sagging home values, that will help everyone, he said.
While the plan may help many who most need assistance, there may be some unforeseen consequences, warned David R. Henderson, a research fellow at the conservative Hoover Institution at Stanford University.
Bailing out homeowners who would otherwise be forced to find more affordable housing could hurt people who are ready to buy homes at rock-bottom prices, he said.
"All those people who have been saving their money, waiting on the sidelines, are being penalized," Henderson said. "The government is taking away this opportunity."
Philosophical arguments about Obama’s plan do little to comfort Jovic, who wonders if he should continue pouring money into a property that may never fully recover its value.
“Do I continue to invest, or do I cut and run?” he asked.