Taxpayers Supporting Foolish Homeowners
San Diego housing
No rational private firm would bankroll the current mortgage market. Government propping merely means using coercion to extract money from renters and other taxpayers to support foolish homeowners who bought during bubble times and craven banks who didn’t man up, admit their insolvency, and close their doors.
Push down the price of housing and more Americans will actually qualify for a home-loan without blind support from the government. Home-purchasing is not a right in America. If you can’t afford to buy a house, rent!
Homeowners Get 50K From Gov Without Repayment
Government homeowners loan program
It seems every month or so there is a new government housing program to help troubled homeowners. So far, industry data suggests that all these programs have been dismal failures. Yet again, it appears the great minds in Washington think that if they offer free money to homeowners they will have a ‘successful’ program.
The Emergency Homeowners Loan Program which is scheduled to be in operation by the end of the year will offer the unemployed a no-interest 2 year government loan for up to $50,000, to pay their mortgage and cover the arrears. There are qualification requirements, a few of which are: the home must be the principal residence, the owner cannot own a second home, be at least three months behind in payments, have a reasonable likelihood of being able to resume payments within two years, have suffered at least a 15% drop in income, and able to afford the mortgage before the income loss.
So far, it sounds like a good idea to help the unemployed although the no-interest part of the loan is a little too generous. I think a low interest, CD-like rate, would be more realistic and be an incentive for early pay-back. However, the crazy part of this new government program is that if the homeowner stays in the house for five years, the loan will be forgiven!
Homeowners – New Treasury Department $1 Billion Zero-Interest Rate Loans
Government homeowner loans
The Treasury Department says it will send $1 billion to a new program being run by the Department of Housing and Urban Development. It will provide homeowners with emergency zero-interest rate loans of up to $50,000 for up to two years.
Let’s hope a condition of these loans is that the homeowners are personally liable for the repayment. But, if just the home is the security for the loan, we’ll just see many more strategic defaults.