This is an interesting article that talks about the ineffectiveness of the HAMP efforts to reduce foreclosures. It claims that foreclosures are the answer to solve the housing crisis, and Government needs to stop giving incentives for irresponsible behavior.
Team Obama is rewarding reckless behavior, punishing the 90 percent of responsible homeowners who are making good on their mortgages, and setting up a greater moral hazard that will surely lead to an expansion of bailout nation.
I’m talking about an add-on to HAMP, the $75 billion Home Affordable Modification Program, which has been a dismal failure. In fact, the entire foreclosure-prevention effor—-- including forgiveness of mortgage-loan principa—-- has been a failure.
The Office of the Comptroller of the Currency reports that nearly 60 percent of modified mortgages re-default within a year.
Team Obama would actually subsidize people making up to $186,000 a year who have a mortgage balance of over $700,000
It’s an upper-middle-class entitlement. Actually, at $186,000, it’s virtually a top-earner entitlement, according to Team Obama's definition of rich people eligible for tax hikes.
Why should the 90 percent of folks who make good financial decisions on their homes have to pay for the 10 percent who did not?
Just because a home loan is "underwater" — meaning its value is lower than today’s current market pric—-- why should a responsible person whine about it and walk away? Why not service this loan for the longer term and wait for prices to improve? That’s called personal responsibility.
Bloomberg financial columnist Caroline Baum argues that lower home prices are the key to solving the housing problem. Popular blogger Barry Ritholtz says we need more foreclosures, not fewer, to solve housing.
Bouncing from pillar to post, the White House has unsuccessfully tried mortgage modifications, foreclosure abatements, and tax credits. None of it has worked. But the price tag so far for these failed government interventions in the housing market is $75 billion and rising.