“Honey, we can get out of the mortgage welfare program. I just got a two month job with the U.S.
Census.”
I have two subsidized housing
updates. They are regarding the Obama
foreclosure reduction program and the Fannie Mae/Freddie Mac bailout.
OBAMA MORTGAGE WELFARE PROGRAM
As was reported in the April
2 edition of Common Sense Capitalism, the Obama Administration released a
new version of their foreclosure reduction program after their
previous program failed. The
administration insists that these welfare programs are set up for “honest”
Americans who were “victims” of the recession.
Common Sense Capitalism has long
argued that keeping people in homes they are not paying for is not beneficial
to our society. The feeling of ownership
is totally lost. If something broke in a
foreclosed home, do you think the inhabitants will pay to have it fixed? Do you believe a house will be more or less
habitable after a year of being occupied by foreclosed tenants? Do you believe that their occupation of the
home will have an appreciative or depreciative effect on the house’s
price? What about the price of the homes
in the neighborhood?
Since the implementation of the
new program, we’ve learned that applicants
have hit the mall on $1,000+ shopping sprees. On June 21, the
Associated Press reported that applicants are exiting the Obama mortgage
welfare program in droves. According
to the article, more than a third of the applicants have withdrawn from the
program and “last month alone, 155,000
borrowers left the program -- bringing the total to 436,000 who have dropped
out since it began in March 2009.”
The Obama Administration is
claiming that the housing market has greatly improved since the President came
into office and that “those who were
rejected from the program will get help in other ways.”
People are not leaving the program
because the economy is improved. How
many households have someone coming home yelling, “Honey, we can get out of the
mortgage welfare program. I just got a
two month job with the U.S. Census.” The
article goes on to explain that;
“A major reason so many have fallen out of the program is the Obama
administration initially pressured banks to sign up borrowers without insisting
first on proof of their income. When banks later moved to collect the
information, many troubled homeowners were disqualified or dropped out.”
The facts are that these so-called
“victims” don’t exist, and most of the foreclosures in America are the
consequence of either living paycheck to paycheck, with low savings, or simply
living beyond their means. I’m not one
to judge the way a person lives their personal financial life, but I’m also not
one to pay for their short-comings when they arise.
FANNIE MAE AND FREDDIE MAC
On the Fannie Mae and Freddie Mac
front, the Congress has opted not to include the companies in the financial
regulatory debate. The two combined have
currently put taxpayers in the hole by $400 billion plus. Compare that will the bank portion of TARP
that the Obama Administration touted as a huge success for earning a $20
billion profit from the banks and it’s clear that the taxpayer bailout is far
from breaking even. According to an article posted Tuesday on CNBC, Fannie and Freddie could cost taxpayers $1 trillion.
Fannie and Freddie now own
hundreds of thousands of foreclosed homes in the United States and have
essentially become a “black hole” for U.S. taxpayer dollars. There was a proposal (as seen from the second
video) to force the banks to pay for the winding down of Fannie and Freddie,
but that appears to be dead. I’m opposed
to this because we
all know who will ultimately end up paying for it.
We’ll keep you posted on Fannie
and Freddie and what the finance experts in DC decide to do with it.
