Irresponsible Borrowers Being Rewarded?
Below is a very interesting article that makes some great points. It will be very hard to determine who was “hones” and who wasn’t. “But let’s assume for the moment that most of the program’s beneficiaries did tell the truth. Does that make them “responsible,” as Mr. Obama says? Many borrowers are underwater, owing more on the mortgage than their home is worth. Declining home prices are of course a big reason. The other big reason is that many of them traded home equity for cash, in some cases several times, while taking on larger mortgages. To say that all troubled borrowers did cash-out refinancings and spent the money on kitchen remodeling, jet skis and trips to Cancun would be unfair. It would be equally unfair to taxpayers not to recognize how common such deals were during the bubble.”
Here is another great point from the article. I think the statistic is that out of the 400,000 people the Hope for Homeowners loan was supposed to help it has only helped close to 400 people. “He might also explain why he is creating still another borrower bailout, when the $300 billion Hope for Homeowners plan enacted last year has hardly gotten off the ground. Although that program, launched in October, appears to be an attractive option for borrowers and lenders, housing analysts are puzzled at the slow roll-out. There are likely several factors at work, not least management of the program by the efficiency experts at the Department of Housing and Urban Development. We also wonder how many borrowers don’t care for the requirement that they certify that their original mortgage applications were honest. Could it be that some “responsible families” will prefer the new Obama proposal because it lacks this requirement?”