Confirmed: Obama's No-Proof-of-Income Mortgage Program Collapses

There was already some rumbling in the papers and definitely in the financial blogs, but the new numbers confirm it: Obama is, in fact, dumber than a box of rocks.

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.

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More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

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But analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery.

Like most of Obama's anti-prosperity policies, this was just a way of kicking the can down the road. I'm sure he hoped it would last until after the midterms, but—goshdarn them—it turns out that people with no income to pay off their loans are unexpectedly as likely to flake on government-subsidized loans as they are the original debt.

Economics is all about incentives and Obama and the Democrats—with all their rhetoric about keeping folks in the homes they cannot afford—have given people extremely odd incentives in the housing market. It's crashing down now..and it turns out that politics is at least a little about incentives too.

posted by Gabriel Malor at 05:18 PM

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