Wednesday, April 15, 2009

Haiku 041509

goslings crowd
the pond's edge ...
skinny dippers


Associated Press: “Six companies to get $9.9B under mortgage program

“The Obama administration on Wednesday named the first six mortgage companies participating in a $75 billion program designed to help millions of struggling homeowners avoid foreclosure….The administration said the companies — including some of the mortgage industry's biggest players [such as Chase Home Finance, Wells fargo, GMAC Mortgage, CitiMortgage] — will receive a maximum of $9.9 billion in incentive payments, which are designed to encourage mortgage companies to lower borrowers' monthly bills….

“The program, unveiled on March 4, will offer struggling homeowners the chance to obtain modified loans with lower monthly payments….The refinancing plan is limited to borrowers who owe up to 5 percent more than their home's current value.....”


…. It’s noteworthy that a campaign promise of assistance to homeowners is being kept. However, the administrators (would these be the six mortgage companies?) of the homeowners’ bailout program should be wary of the trap of unintended consequences. They could be unduly rewarding a bunch of undeserving folks.

For example, the unscrupulous flippers who finally ended up being stuck with "investment" properties, which they thought they'd quickly resell for a substantial profit as before -- but now can't. Or those irresponsible homeowners who took out so-called home improvement loans -- encashing their homes’ equity -- fully intending, however, to simply spoil themselves with frivolous or ostentatious purchases. If they're not screened out, the program would be such a silly waste of scarce resources ….

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