It would not be an election year without the White House offering yet another bailout for distressed borrowers who owe more money on their homes than they are worth.
Of course, it’s all political. Don’t let anyone tell you different.
“The goal is to build a constituency of borrowers underwater on their mortgages with the hope that they might — emphasis on might — be able to get some relief,” said Americans for Limited Government President Bill Wilson, calling it “nothing more than a cynical election year ploy.”
There is good reason to be skeptical about the government’s latest program, which would take taxpayer money out of TARP and be used for writing down the principal owed on mortgages.
Every single year of the Obama Administration, such programs have been attempted, including the failed 2009 mortgage modification program, which fell far short of its goal to modify 3 to 4 million mortgages. In the end, just a fraction of the goal— only about 10 percent — were even modified.
More recently, the White House expanded its mortgage refinance operations to allow refi’s above 125 percent loan-to-value. This would allow borrowers to get into a lower interest rate even if they are underwater on their mortgage.
That was done without any vote in Congress, too, and in spite of the fact the law that put Fannie Mae and Freddie Mac into government conservatorship only allowed refi’s of up to 90 percent loan-to-value.
But, if at first you don’t succeed, try, try again is the Obama mantra when it comes to its many failed efforts at foreclosure “prevention”. With millions more foreclosures anticipated this year, Obama appears convinced that trying the same thing over and over again expecting different results is not insane.
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