The Obama Administration is extending an unfair program to help those borrowers who were dishonest about their creditworthiness for obtaining a mortgage or who got in over their heads by purchasing homes far larger than they could afford to maintain.
The Administration is doubling the amount of the mortgage principle reduction for borrowers at risk of foreclosure for failure to pay their mortgages from $5,000 to $10,000. The welfare program is funded at the expense of taxpayers who were responsible and yet who lost value in their homes as a result of the mortgage defaults that burst the housing bubble, which exacerbated significantly the recession and caused the Panic of 2008. Such policies thus reward irresponsibility while punishing responsibility with taxation. Furthermore, there has been no federal aid for responsible homeowners to make up for the loss of their home equity.
See also my post from April of 2012, on a related story in which I expound on the issue of federal aid for mortgage holders in greater detail, Outrageous Mortgage Foreclosure Settlement Rewards Irresponsible Homeowners, http://williamcinfici.blogspot.com/2012/04/outrageous-mortgage-foreclosure.html. In it, I also explain the complicity of liberal federal policies in causing the problem by promoting lending to irresponsible borrowers in the first place.
It was outrage over the Obama Administration welfare program for irresponsible homeowners that it is now extending that sparked the tea party movement in 2009. I hope that outrage over the Administration’s reward for irresponsible borrowers will renew the movement for fiscal responsibility.