Government set to subsidize foreclosures

Yet another government program to ‘solve’ the mortgage crisis pays homeowners to foreclose. This is unbelievable. Via the New York Times:

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.” [My emphasis]

To correct one glaring misnomer, the government has no cash to “spread around.” That is your money and my money they are “spreading around.”

By | 2010-03-08T08:58:02+00:00 March 8th, 2010|Government|Comments Off on Government set to subsidize foreclosures

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