Obama: We Must Bailout Innocent Homeowners Who Didn't Know What They Were Doing And Also Speculators Who Helped Inflate The Housing Bubble

Via Amanda Carpenter, I had this in the Obama presser thread but it should get some more attention.

Landlords can qualify for up to four federally-subsidized loan workouts starting around May, as long as they rent out each house or have plans to fill them, under the revamped Home Affordable Modification Program, also known as HAMP, according to Timothy Massad, the Treasury’s assistant secretary for financial stability. The program pays banks to reduce monthly payments by cutting interest rates, stretching terms, and forgiving principal.

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By widening the program, the plan will inevitably offer aid to buy-and-flip investors who pushed prices higher during the boom by taking out mortgages with little or no down payment. Speculators accelerated the crash because they were quick to default when prices fell, according to a September report from Andrew Haughwout, Donghoon Lee, Joseph Tracy, and Wilbert van der Klaauw of the Federal Reserve Bank of New York.

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John Burns, an Irvine, California-based real estate consultant, said it’s “ridiculous” for taxpayers to come to the aid of individuals who made bad bets.

“What kind of precedent are you going to set?,” Burns said. “Are you going to refund people who lost money on the stock market too?”

Only if you invested in a green tech firm that went belly up.

posted by DrewM. at 02:53 PM

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