On January 24, 2012 President Obama stated in his State of the Union speech ?Millions of Americans who work hard and play by the rules every day deserve a government and a financial system that do the same. It?s time to apply the same rules from top to bottom. No bailouts, no handouts, and no copouts.? He obviously didn?t mean it, seeing that he?s bailing out out real estate speculators who helped inflate the real estate bubble that?s left so many Americans with underwater mortgages.
Bloomberg has the story.
The Obama administration will extend mortgage assistance for the first time to investors who bought multiple homes before the market imploded, helping some speculators who drove up prices and inflated the housing bubble.
Landlords can qualify for up to four federally-subsidized loan workouts starting around May, as long as they rent out each house or have plans to fill them, under the revamped Home Affordable Modification Program, also known as HAMP, according to Timothy Massad, the Treasury?s assistant secretary for financial stability. The program pays banks to reduce monthly payments by cutting interest rates, stretching terms, and forgiving principal. (Read More)
The recipients of this new bailout include house flippers who bought during the height of the bubble, according to the Washington Post.
Until now, the White House had only extended mortgage modification to owner-occupied homes, rather than real-estate investors and landlords?a group that includes the kind of buy-and-flip speculators that fueled the bubble in the first place. At the peak of the bubble, almost half of all new mortgages were linked to investors trying to make money in the states with the biggest housing bubbles, according to a September report by New York Federal Reserve that Bloomberg flags. ?In part by apparently misreporting their intentions to occupy the property, investors took on more leverage.?.?.these marginal borrowers appear to have contributed substantially to both the increasing amount of real estate related debt during the boom, and to the rapid deleveraging and delinquency that accompanied the bust.? (Read More)
The speculators gambled and lost. Now the taxpayers get to bail them out. Lovely.
Update: There?s a related story out there about a Maryland couple living in a $1.29 million McMansion who have never made a payment on the beautiful home, but continue to live there after five years. Check it out at Zero Hedge. Good grief.
Source: http://lonelyconservative.com/2012/03/obama-bailing-out-real-estate-speculators/
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