Horrible Follow-Up to Mortgage Bailouts
You might not know it, but I’m trying to find good news these days. This does not qualify:
The Obama administration will extend mortgage assistance for the first time to investors who bought multiple homes before the market imploded, helping some speculators who drove up prices and inflated the housing bubble.
Landlords can qualify for up to four federally-subsidized loan workouts starting around May, as long as they rent out each house or have plans to fill them, under the revamped Home Affordable Modification Program, also known as HAMP, according to Timothy Massad, the Treasury’s assistant secretary for financial stability. The program pays banks to reduce monthly payments by cutting interest rates, stretching terms, and forgiving principal.
Why stop at four? Why not go with a dozen, or twenty? Seems rather arbitrary.
The Obama administration announced last month that it would triple incentives to owners of mortgages that reduce home-loan debt and expand eligibility to borrowers struggling under the weight of other liabilities, such as medical bills. The extension will apply to all loans, including those held by Fannie Mae and Freddie Mac, the government-sponsored mortgage financiers. About 700,000 landlords will be eligible under the revisions to HAMP, which has been plagued by consumer complaints about lost paperwork, servicer delays and restrictive eligibility requirements.
“This is a huge change,” said Dan Immergluck, a housing policy professor at Georgia Institute of Technology. “The excessive concern to make sure nobody who played any role in creating the problem gets any benefit has paralyzed the response.”
Triple the incentives = “here’s some more money from the taxpayers.” As far as excessive concern, truly Professor Immergluck is making a joke here.
The following gentleman deserves much credit for boldly addressing the matter:
John Burns, an Irvine, California-based real estate consultant, said it’s “ridiculous” for taxpayers to come to the aid of individuals who made bad bets.
“What kind of precedent are you going to set?,” Burns said. “Are you going to refund people who lost money on the stock market too?”
Sadly enough, the answer to that question is one which I am afraid to hear.