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Barack Really is Going to Pay Her Mortgage

Posted by Larry Doyle on March 26, 2010 8:24 AM |

My blood is boiling. Why?

The assault on the principles of free market capitalism is escalating with news that banks are poised to start reducing principal balances on certain mortgages.

I empathize with those who are strapped, but I have never felt more strongly on a topic than this principal reduction. Despite any and all bulls*%# put forth by those in Washington, the principal reduction program is an enormous escalation of the violation of moral hazard which our country sadly continues to embrace. I have no doubt it will expedite the development of a socialized housing finance system.

Do not think for a second that banks will take the hit on these principal reductions. Who will take the hit? Me and you. Those who have worked hard, saved, played by the rules, and taught our children to do the same. I have no intention of changing that approach and will work that much harder to instill these virtues in my children. That said, these virtues are under assault under this program. My children’s future is being negatively impacted as the costs of principal reduction will be pushed off on them.

The Wall Street Journal addresses this topic this morning in writing, New Plan to Cut Some Mortgage Balances:

The White House will announce Friday an expansion of its foreclosure-prevention efforts to include reducing mortgage loan balances for some borrowers, a controversial step that policy makers have long resisted, people familiar with the plans said.

The revisions, which will also include temporary help for unemployed borrowers, serve as a recognition that the administration’s foreclosure rescue plan hasn’t kept pace with the rising number of souring loans.

Under the plan, the Federal Housing Administration (LD’s edit: the FHA is you and me, boys and girls) will take on a much bigger role in government efforts to avert foreclosures by allowing some homeowners who owe more than their homes are worth to refinance into government-backed loans, according to people familiar with the plans. The FHA, which doesn’t make loans but insures lenders against losses, already faces rising losses on loans it has backed.

Reduced balances, reduced rates, and taxpayers assuming the risk via FHA-insurance is socialized housing. Yes, socialized!!

The WSJ continues:

On Thursday, lawmakers and a government watchdog sharply criticized the administration’s effort to modify loans at a congressional hearing. Neil Barofsky, the special inspector general for the government’s $700 billion TARP, warned that the program risks helping few borrowers and could instead spread out the foreclosure crisis over several years.

Kick the can down the road and have our kids pick up the tab. Screw that!!

Herbert Allison, an assistant Treasury secretary, said that the administration didn’t “fully envision the challenges that we would encounter” but defended the program as the first wide-scale effort that had moved banks toward substantially reducing payments.

Herb, stop the bulls*%#! If the government didn’t understand, then they were too stupid. More likely, the government, including you right here, has lied and continues to lie to the American public.

So far, around 170,000 borrowers have received permanent modifications, while another 835,000 are in a trial stage.

The administration also has struggled to launch a program designed to encourage banks to modify second-lien mortgages. The administration is expected to increase incentive payments under that program.

Increase incentive payments? Read that as more taxpayer bailouts for a failed banking system.

If you think you’re getting screwed. You’re right. You are. Your kids are getting screwed, as well.

Let’s revisit fall 2008 when one young woman was truly prescient:

  • Fed Up

    Do not think for a second that this program will not cover up and effectively condone the massive fraud that was perpetrated by both mortgage originators and mortgage borrowers.

    When fraud is not punished it perpetuates. In fact, I would fully expect we will see MASSIVE fraud take place under the veil of this program as well.

    • Lou

      How many mortgage fraud cases have we seen brought to justice? Few if any!!

    • Duke

      How many people out there right now are thinking, “how do I get this done for my mortgage?”

      Whether they can get it done or not, the mere fact that these thoughts are increasing will change consumer behaviors in a very negative way.

      Is this America?

  • Future Moocher ? ? ?

    Once more moochers vote than responsible citizens, the game is over, if not already . . .

  • Aaron Kramer

    Why would anyone, with a functioning brain, who is underwater continue to pay their mortgage and bail everyone else out? I believe that many gainfully employed people will stop paying their mortgage. I am sure some law will be passed that will allow the government direct access to you assets in order to resolve your obligations to the government. They just passed similar legislation with regards to the enforcement of the healthcare mandate.

    As time goes by and the government makes us clients rather than citizens, more of our debts will be owed to Uncle Sam instead of B of A, or Wells Fargo. I have a sneaking suspicion that at some point in the future it will be impossible to get any type of loan without government backing. If your able to convince you government loan officer to extend credit to you, I’m sure that defaulting on a government backed loans will be impossible. Good luck to all.

  • Mike

    Well I’m still waiting for my socialized gas.

  • mountainaires

    The Community Reinvestment Act, or whatever it is called, way back when, was the beginning of our embrace of “moral hazard.” We haven’t stopped since. The idea that mortgage write-downs is an act of kindness by the banks is ludicrous; the unintended consequences will be costly, but they already are costly. It’s clear that this country is on it’s last legs as a global superpower. We produce little; we manufacture virtually nothing. Our entire economy is based on consuming things that others produce.

    This nation has become a complete nanny state, and one day we’ll have no jobs except government jobs, no mortgages except government mortgages, no transportation except government-funded transportation, no retirement except government funded retirements from government jobs. And college students will all go to school on government-funded grants, to train for government-jobs, or jobs in other countries, working for multi-nationals who produce products overseas so we can consume them on our government-funded salaries here in the USSA, the United Socialist States of America.

  • Randy

    Our government continues to blatantly ignore the will of the people and to take action after action that leads us ever closer to financial collapse.

    A growing percentage of Americans have all but totally disavowed any personal responsibility for their own actions, unless of course those actions resulted in favorable consequences, in which case they immediately claim they alone had full responsbility for said results.

    Moral decay and lack of integrity seems rampant at so many levels of society, resulting in what appears to be a partial breakdown in the family unit and widespread corporate misconduct including blatant and pre-meditated fraud on a regular basis.

    To add insult to injury, our leaders appear to be only too happy to reward those micreants and fraudsters for their abhorrent behaviors by transferring to them what little wealth remains in the hands of the average taxpayer.

    Those who so proudly welcome the new government hand-outs seem to have totally forgotten that every dime of the money for those hand-outs is being stolen through excessive taxes and fees from the earnings resulting from the sweat and toil of their fellow Americans. Stolen by our government leaders and doled out at their whim to their cronies and to other factions such as Unions.. whose favor and votes they need to continue their fleecing of the rest of us Americans.

    The freeloaders and would-be freeloaders demonstrate in the thousands to get their fair share of the spoils despite not having earned them. Meanwhile, the rest of us content ourselves with the occasional bitch and gripe session at a Friday night gathering o our buddies at the local bar or eatery or in blogs (such as this fine and necessary venue provided by the courageous and erudite Mr. Doyle) as though doing so is somehow more than sufficient effort on our part to make ourselves heard and turn the tide in what can only be called the fleecing of the average American.

    Are we all really going to just sit back and take it without standing up to be counted in some legal and peaceful fashion? Shall we just sit idly by as our government and the financial behemoths deemed too big to fail continue to steal for themselves all that we cherish and hold dear?

    Are there really any amongst us who have the balls to explain this to our children or our grandchildren with a straight face? To tell them that we sat idly by and did nothing as their futures were destroyed before they were old enough or big enough to do anything about it? Is that the legacy we intend to leave to them?

    I harken back to a 1998 article, reportedly published in the Wall St. Journal, by a Professor Panarin in Russia (a former top KGB analyst and expert on geopolitical risk) wherein he predicted the coming collapse of the American Empire through financial and moral decay, possibly leading to a new civil war and break-up of the union of the states.

    At the time, I dismissed his predictions as lunatic ravings of an angry and disenchanted communist, despite his credentials and expertise. However, as time progresses, I am more than a little bothered by the possibility that perhaps he too may have been strangely prescient in his predictions.

    It is getting downright scarey to see how fast we are losing our freedoms and our financial futures. If we continue in our abject refusal stand alongside our fellow man/woman in large scale peaceful and legal demonstrations in pursuit of a return to sanity here in America, then what hope truly remains for us?

    Does even one of the readers of this message believe that our leaders will suddenly have a dramatic change of heart and start taking actions to truly fix these problems instead of digging the hole ever deeper? If so, please explain to the rest of us who that person or group might be and how will he, she or they achieve that minor miracle?

    If good men/women won’t stand up to be counted, then the battle is already over and we have no one but ourselves to blame for how we end up. The longer we sit idly by, the more that those who think like us will believe they are no longer the American mainstream .. that they are somehow just the fringe of society, because the rest of us are not speaking up or being counted.

    The clock is ticking and your neighbor is wondering if you are thinking what they are thinking. Start speaking out, so that they know there are many of us and that we can and will stand together.

    If not.. then start recording your Video of Apology to be seen by your children and grandchildren once you pass on for I am sure you haven’t the guts to make that humbling presentation face to face.

    God help us all….

  • Tony

    Maybe we all need to understand that not all homebuyers were irresponsible. Good hard working honestly bought homes they could afford and the mortgage collapse ruined their dreams by totally erasing any and all possible equity. If you neighbor walks away and the home sells for 100K less, how is it the other persons fault that value has been lost. This is a serious problem and needs to be fixed regardless of your political affiliation and views!!

    • LD


      I think people do understand that point. I empathize with people but the critical point in this process is the massive unintended consequences this program will have.

      I firmly believe that this program will actually exacerbate the situation because it will cause others to do things that will help them gain access to the program. That gaming of the system will motivate people to appear more desperate than perhaps they are and serve as a vehicle for the redistribution of money from one group within society to another.

      Behaviors will change in a very unproductive fashion. That is neither healthy nor positive.

  • CM

    The horrific consequences this will have are untold….unbelievable stupidity on the part of our government but then what is surprising about that. Health care reform will be taxing those that are employed and have health benefits so those that don’t work can have free benefits. Okay… what is the breaking point where it just doesn’t make sense to work anymore when we are forced to give our money away?? I am baffled, not to mention quite stupid for being responsible.

  • disenchanted

    We are fighting a losing battle in every aspect of this country, from health care to regulation. From my view, the public was not in favor of this bill so how did it pass? Obviously, we the public do not count. Our elected officials promise to listen to us UNTIL they get into office. I have professed that we need new blood. We have a new President, and he surrounds himself with the same group of politicians. It is a good old boys club. Obama wants to be Robin Hood, take from the rich and give to the poor. (Himself exempted.) Maybe it is time we all sat on the beach and let the government find a way to support us the way they want us to support the poor.

  • Bill

    The only way structurally to put an end to this is national term limits. Three terms max in the Senate (I could easily be argued into two), six in the House. That way these cretins aren’t perpetually giving away the people’s money to deadbeats to retain power.

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