Obama first shakedown didn’t work and it cost taxpayers billions. So, Obama is trying a second shakedown and it will cost taxpayers billions. Redistribution of wealth from the responsible to the irresponsible.
It’s basically H.AM.P. Part II. Obama’s $75 billion ‘homes affordable modification program’ failed by its own standards and Congress decided to end the tax wasting program last week. The Inspector General, for over a year, reported the program was an absolute failure, yet the Democrats continued to waste billions as Obama smugly nods.
Obama promised his H.A.M.P. program would save 3 million homeowners from foreclosure. It only helped around 640,000 since only 1 out of 4 applicants were approved. Banks foreclosed on over 1 million homes during this Obama ‘economic recovery” and it is predicted to be even worse in 2011.
To make things worse, more people dropped out than those who were approved.
So Obama is going to force banks to forgive individual who are delinquent in paying their mortgages. If the banks agree to this strong-arm manuever, they will lose billions. How will they recoup their losses? They will pass it back down to the consumers and those responsible individuals who pay their mortgages as required.
From Huffington Post:
NEW YORK — The Obama administration is seeking to force the nation’s five largest mortgage firms to reduce monthly payments for as many as three million distressed homeowners in as little as six months as part of an agreement to settle accusations of improper foreclosures and violations of consumer protection laws, six people familiar with the matter said.
Described as a “shock and awe” approach, the deal would accomplish the four goals set out by state and federal policy makers and regulators as part of their multi-agency investigations into abusive mortgage practices by the nation’s largest financial firms: punish banks for violations of state law and federal regulations; provide much-needed assistance to distressed borrowers; stabilize a deteriorating housing market; and dissuade firms from abusing homeowners in the future.
The modified mortgages could cost the five financial behemoths — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial — as much as $30 billion, according to sources. Combined, the five firms handle three out of every five home loans, according to newsletter and data provider Inside Mortgage Finance.
It also could lead to reduced mortgage payments or lowered loan balances for nearly two-thirds of the 4.7 million delinquent homeowners who have yet to fall into foreclosure, according to data provider Lender Processing Services.
The aim is to ensure the number of assisted borrowers is spread throughout the country, and that banks modify both expensive and inexpensive mortgages, people involved in the talks said. Banks also would likely forgive mortgage principal in situations where a pre-determined formula dictated that it was the best way to modify a home loan. Balances on second mortgages and home equity loans — of which nearly half of all outstanding loans are owned by BofA, JPMorgan, Citi and Wells — would also have to be written down.
Since Freddie Mac and Fannie Mae insure half of the mortgages in America, the taxpayers are on the hook to pay these banks for their losses.