Is It Fair For The U.S. Government To Give Money To Some People (But Not To Others) To Help Them Pay Their Mortgages?

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Millions upon millions of Americans are struggling with paying their bloated mortgages right now.  So is it fair for the U.S. government to be giving money to some people (but not to others) to help them pay their mortgages? Well, it turns out that U.S. citizens in 10 states will soon be receiving money as part of a $2.1 billion federal program to help distressed homeowners pay their mortgages.  But is this fair?  Why will only citizens in 10 states by getting funds?  What about the other 40 states?  Well, the money for this mortgage relief program is going to come from a special fund within the Troubled Asset Relief Program (TARP) known as the “Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets”.  In other words, people in the areas where housing prices have fallen the most are going to get help living the American Dream, and everyone else is out of luck.

 

The first five states to qualify for these funds – Arizona, California, Florida, Michigan and Nevada have submitted their proposals to the U.S. Treasury for approval and are expected to start disbursing funds this summer.

Some of these proposed state programs are quite generous.  For example, in the state of Florida, the state will make nine months of mortgage payments on behalf of distressed homeowners as long as the lenders agree to forgive another nine months of payments.

Wow!

18 months of free mortgage payments?

Can the rest of us get in on that action?

After all, who couldn’t use a free gift worth 30 thousand dollars or more?

But it just isn’t the U.S. government that is being generous these days.

Bank of America has announced that it wants to give struggling mortgage holders who are collecting unemployment benefits up to nine months with no mortgage payment.

The catch is that mortgage holders would have to agree that if they have not gotten a job within the nine months that they will sign over their house to Bank of America.  Bank of America would then give those customers at least $2,000 to help them with their moving expenses.

Bank of America’s proposal still needs regulatory approval, but on the surface it sounds like a good idea.  It would help everyone who does not have a job and it would keep more people in their homes while helping out Bank of America at the same time.

However, the U.S. government program seems far from fair.

Why are residents of only 10 states going to get help?

Why do taxpayers have to pay for the stupid decisions of Americans who purchased bloated mortgages at the top of the market?

The TARP money was supposed to go to purchase troubled assets.  By giving the money directly to homeowners, the money will be gone and the U.S. government will never get anything in return.

This U.S. government program is yet another example of the folks in Washington wanting to “fix” something by giving out big handouts.

But giving out handouts never was a long-term solution to anything.

All it does is get the U.S. government into even more debt.

But if there is one person in the U.S. who is deserving of some mortgage help, it is probably 100-year-old Agnes Albinger of Illinois.  She has lived on her 70-acre farm for longer than most of us have been alive, but now she is being foreclosed on.  She has raised 40 foster children there and had planned to die on the farm, but now she may be forcibly removed.

The really sad thing is that people who really need some mortgage help like Agnes will probably never get any, while spoiled yuppies who got into trouble with their mortgages in Nevada or California will end up with tens of thousands of dollars worth of mortgage assistance.

Isn’t it such a great country that we live in?

 
  • Chuck

    Seems to me, that the FED could have given at least $200,000. to every person in America who files a Tax Return. If you own a home, for sure you file a “return.” This would have been a true economic stimulus. Distressed homeowners could have paid down / off their mortgages and refinanced the remainder at a lower interest rate and payment with their bank or Mortgage Company. Thus, those “black assets” that drove the economy into the ground in the first place would have lessened, perhaps stopped the recession.

    People who don’t have mortgages but who file “returns” would be required to pay ALL or as much of their existing debt as $200,000. could accommodate. Again, the banks and the government recoup their investment. Is this fair? I think it is. If you don’t file a “return” you probably don’t contribute much to the country anyway and why would the government give you money from a pool that you never paid in to?

    On thing is true for sure: MONEY FLOATS BUT IT NEVER SINKS. The stimulus was given to millionaires and they pocketed it. Credit is almost impossible to get. The folks that really need help still can’t get it. This article is a testament to how this government and its big business / special interest partners are using scams like this to line their pockets and exploit hurting Americans.

  • Ari

    Actually, this seems pretty fair to me. Why shouldn’t the areas that are hit hard by the housing decline be the ones to receive help? Should we just allow part of the country to rot, while the other part continues to prosper?

    Granted, the areas of the country that suffered the most were also the ones with the greatest levels of risk, but that is no reason to punish them.

    I’m sure if YOUR neighborhood got ruined in the greatest recession of the century, you’d be very happy to receive stimulus funds.

  • Big Bear

    I predict a mortgage revolt against the bankers. People are sick and tired of the billionaires getting a free ride from their government toadies. The breaking point will come when there is some sort of violent conflict between a beleaguered homeowner and law enforcement. If law enforcement refuses to act in repossession cases, then what will the bankers do? Hire private “evictors”? Such a move would lead to retaliation against the bankers, their families, and their financial interests. Since there aren’t that many billionaire banksters, any such attacks would be felt severely in their Old Boys network.

  • Ari – I’m sure those folks are very happy to get the bailout cash…but am I happy to be giving it? Not so much.

    In addition, the people who were ‘hit hard’ by the housing decline were the ones responsible for speculatively bidding up prices trying to hit the housing jackpot. We’ve all heard stories of people selling houses for $50K-100K more than they bought them for in a year or two. Did they actually earn that money?

    They gambled and they lost. But while the game lasted they were quite happy to take those house flipping profits though, and not share them with me or anyone else (primary residences are exempt from capital gains if you live in them for 3 years)…so they didn’t even pay taxes on the profits.

    One could even ask if it’s fair to allow homeowners to not pay capital gains and to deduct mortgage interest…this is another factor in bidding up the asset price of housing that is rarely discussed.

    So. Now we’ve got HAMP that:
    1: Is encouraging people to keep paying into housing that they are going to lose anyway instead of declaring bankruptcy and getting it over with…they’d be halfway to mending their credit scores by now.

    2: Gives banks little incentive to ‘work something out’ since they can hold out for some Uncle Sugar money, then foreclose later.

    3: Encourages banks to hold on to foreclosed properties to try and sell at re-inflated prices (this also keeps homes unaffordable for those who saved), and also games their books (if they valued these houses at true market prices, many big banks would be insolvent).

    All the gov’t has to do to stimulate the economy would be to forgive income (consumption) and payroll (biz expenditures) taxes for one year – it would cost (for the income tax at least) ~$400B and the PRODUCTIVE people in society would each have the ability to pay down debt, pay the underwater amount in their mortgage and move for work, or if they weren’t in financial trouble they might actually buy that big screen TV or whatever.

    Instead, they picked the $700B number out of a hat (they’ve admitted this) to give to the banks, which have taken those TARP funds, and instead of buying back distressed mortgage securities are now using that cash to short municipal bonds (ie: betting that our cities and states will go broke)…nice bunch of guys there.

    This is way beyond unfair…

    -DaveP
    PGH PA

  • Federalist45

    Simply ANOTHER instance of Socialism’s redistribution of wealth. I have worked extremely hard for 26 years to pay my mortgage and other bills on time. I have been blessed with a good job to do just that. But I NEVER overreached, either. I lived within my means, buying a house I could afford and used cars, not spending on clothing and entertainment, and not throwing money away gambling/investing. I have played by the rules of the game as they were set out before me 26 years ago. Now, Congress is constantly changing those rules to bail out the greedy and gluttonous. It will steal from ME to give to YOU. It is wrong. I AM SICK AND TIRED OF PAYING FOR EVERYONE ELSE’S MISTAKES. Greedy bankers, greedy consumers, greedy politicians. It must stop. And this particular bail-out is just one more example of why.

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