Saturday, March 27, 2010

New Mortgage Program Robs Peter to pay Banker Paul

The new government program, HAMP, to help troubled homeowners is nothing more than another program where America taxpayers pay off bankers. Details here.

Here's the message: "Let's help unemployed homeowners struggling right now keep their houses".

The reality is that the American taxpayer will pay banks and holders of the mortgage securities 15-21% for any mortgage principal amount that they reduce. The 'homeowners' who owe more than 100% of their home' value only get the benefit of reduced payments for 3-6 months. Even with principal reduction, how affordable will the payments be? What is the advantage to staying in that home vs. renting a cheaper place? This is a bank bailout using troubled homeowners as a smokescreen.

Losers:
1. Taxpayers - Taxpayers will be paying banks money.
2. Banks that did not make bad loans - Their clean portfolios don't get bailed out.
3. Homeowners without mortgages - Where is their handout?
4. Renters - Extend and pretend financial faux fixes keep home prices inflated.
5. Homeowners who pay their mortgage on time - Where is their handout?
6. Retirees - They pay property taxes that are based on the housing bubble that has yet to deflate, lowering tax bills.
7. Housing repair workers - Think a million NEGLECTED homes held off the market by banks holding them don't need repairs? The construction crews, plumbers, electricians and carpenters of America would appreciate the work.

Winners:
1. Banks - They get paid 15-21 cents on the dollar on loans they would probably have to completely write off. HUGE win. This is critical when the 'homeowners' still default in 6 months.

Pawns:
1. 'Homeowners' - These debt slaves get a few months at lowered payments and reduced principal. Wait, they are still unemployed, and looking at HAMP results will fall behind again. This just locks them in as debt slaves longer.

We need to flush the bad out of the housing market before it can start to heal. This is another handout to bankers from the Obama administration. President Obama could be tough on the banks if he wanted, and nearly all of America, except Wall St, would support that.

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