On FBN: Psychologist weighs in on subsidized mortgages

Psychology clearly plays a major role in investor confidence and behavior. The Fox Business Network asked Dr. Jeff Gardere to evaluate how the possibility of government subsidized mortgages may affect the housing market. The plan, scheduled to be outlined by the Obama adminstration next week, would help struggling homeowners with their mortgages by lowering interest rates, reducing principal or extending the term of the loan.

Dr. Gardere believes the plan  "may be a move in the right direction." But the doctor also explains that it's important for the government to devise a precise eligibility test that will keep taxpayer confidence high and prevent people from abusing the system.  Because the housing crisis is a major component of the financial turmoil, keeping people out of foreclosure will most likely have a positive effect on the economy. Overall, he believes this is a psychologically sound idea that will boost the morale and confidence of the American public. 

According to Dr. Gardere, the only drawback is the fact that the plan has taken too long to implement.