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Be bold enough to ask?
I know for many of you reading this blog, you may suspect me to be some crazed wacko blogging away in his underpants in his mothers basement but, that image is far from the truth. When reading what I have to write, just keep an open mind and simply ask, “What If?”
A History Lesson-
Franklin Roosevelt Democratic Nominee for President 1932
“Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth…. I pledge myself to a new deal for the American people. This is more than a political campaign. It is a call to arms.”
The New Deal wasn’t a “deal” at all. More so, it was the foundation of a Progressive agenda to move the nation further and further away from our constitution of individual liberties to a centralized large Government who knows best.
In a “Government Knows Best” effort, the New Deal encouraged private home building and sought to grow the number of people who owned homes. In this effort, the creation of the Home Owner’s Loan Corporation (HOLC) and the Federal Housing Administration (FHA).
Among the many mandates of the HOLC, the one I am going to focus on is the mandate to “Facilitate nationwide lending”. So, what exactly did “Facilitating Nationwide Lending” mean, what influence did it have on America?
It’s very important to understand that HOLC did not lend money. The HOLC bought and refinanced mortgages in default directly from the lenders by issuing bonds that paid out 3 or 4 percent. The HOLC had made 1,021,587 loans, essentially making it the owner of approximately 1/6th of the urban home mortgage debt in the United States.
Doesn’t sound too bad…right? Well, here is where the problem comes into play. It is only successful when the people you refinance can afford the home at the new payment. In a jobless recovery like the one many say we are in now, if you refinance a struggling homeowner’s mortgage but, they have no income to pay for it, you end up back at square one, a foreclosure.
Sounds simple enough….right? Not really because with the HOPE and HAMP programs our government is essentially securing or backing the loan and if the homeowner defaults off the program, guess who is stuck with the bill………………………………….(keep guessing)………………………………….(DING,DING,DING)……….TIME IS UP.
It’s the American Taxpayer!
So, here is the question that I am bold enough to ask.
Why would anyone lawmaker get behind any “bail out” program for the homeowner if in the end, the homeowner still can’t afford the home, it still goes to foreclosure and the tax payer ultimately ends up paying the tab?
By the way, just to be clear, 73%-75% of HAMP / HOPE participants default off the program and end up in foreclosure in the first 3-5 months of participating.