Irresponsible Home Buyers Reaching Deeper into our Pockets
Handout specialist – and professional nose wiper – President Obama has decided to toss more taxpayer money at irresponsible home buyers. (I won’t say home owners because those folks don’t own anything except mountains of debt.) I am referring to the money morons who, when lacking cash for a down payment, used a second mortgage to close the deal.
The Second Lien Rescue Program is in Action
Not to worry, says President Obama. We feel your pain. We definitely need your vote. So here is what we are going to do with our new “Second Lien Program”:
Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury, allowing servicers to target principal extinguishment to the borrowers where extinguishment is most appropriate.
And the money details:
Servicers can be paid $500 up-front for a successful modification and then success payments of $250 per year for three years, as long as the modified first loan remains current.
Borrowers can receive success payments of up to $250 per year for as many as five years. These payments will be applied to pay down principal on the first mortgage, helping to build the borrower’s equity in the home.
Everyone who was involved in the original mortgage silliness gets government money – lender and borrower.
When it comes to Americans who are financially reckless, it seems that the government’s largesse has no bounds. Mr. ToughMoneyLove doesn’t want to help those people. I want them to feel pain in such a way that a lesson is learned – permanently. Throwing our money at them will not accomplish that.
I’m now waiting for the final phase federal home buyer rescue program to be announced: the “Nothing is Working with these Clueless Home Buyers So Let’s Just Pay Off their Damn Mortgages and Be Done With It” Program.
Call me crazy but before you do, consider how far down that path we have traveled already.
Would you have called me crazy if two years ago I had predicted that the federal government would own and be calling the shots in the U.S. automotive industry?
Photo credit: Matti Mattila