Hillary's $1 billion foreclosure bailout

Good morning, again. Hillary Clinton today is rolling out a series of housing proposals, including a crackdown on unscrupulous mortgage brokers and a $1 billion fund to help homeowners avoid foreclosure. Highlights from the AP:

--"Presidential hopeful Hillary Rodham Clinton is calling for penalties on unscrupulous mortgage brokers who engage in predatory lending and a $1 billion federal fund to help homeowners avoid foreclosure."
--Clinton: "The unfortunate fact is, many people have gotten into the mortgage market who are being exploited and abused by boiler-room mortgage-lending operations that are just like selling phony penny stocks or the old traveling salesmen with the snake oil."
--"Clinton also will propose a $1 billion federal fund for local and state programs that help at-risk homeowners avoid foreclosures. She said those programs could help the 'unsuspecting families' linked to unfair mortgages."
--"And she also planned to demand lenders remove early payment penalties attached to some mortgages."

Thoughts? Insights? Questions? Comments?
Photo Credit: AP

Comments

[Kathryn]

Here goes the Dems shooting themselves in the foot. No wonder Bush got elected twice when the alternative are Democrats who want to reward those tried to cheat to get ahead and got burned. Most people knew the housing bubble was going to burst, most people knew that teaser arms and negative amortization were bad ideas. Bailing out these morons just reinforces the nanny state where no one is responsible for their actions. That's what the Democrats don't get. Voters are sympathetic until it affects their pocketbook. I'm not paying for some moron who bought too much house and is now in foreclosure. If Hilary campains on this, she'll loose. Sure foreclosure is affecting some, maybe 5%, but that means there's 95% who don't want to pay for the other idiots' mistakes.

[Dan Moran]

It's a ridiculous proposal, and, as noted, much too small to make a difference.

As to "TAX and Spend" above ... probably wouldn't interest you any to know which party has grown the government more during your lifetime? No, I didn't think so. I want to find one conservative who'll decry BORROW and Spend as thoroughly as they decry TAX and Spend ... I guess taxing my children instead is OK with them.

[Mary G.]

What Hillary is proposing is not handing out money to people to pay their mortgages, but giving money to various community and credit repair groups to help people see if they can find ways to negotiate with lenders or use other means to hang onto their houses. Think about it: $1 billion dollars would not save many houses if it were free money for mortgage payments/buyouts, because people are on the hook for hundreds of billion, if not trillions, of dollars for their shaky mortgages. People need to calm down and see what Hillary is actually saying here; whether it's a good idea even for what it is (and maybe could be done for less than $1 billion), I'm not sure. I'm not a Hillary fan, and won't vote for her in the primaries, but I don't think she needs to have her intentions misrepresented.

[Ben Brown]

Not nearly enough money. I mean, get real, $1 bln would cover 50,000 troubled mortgages to the tune of $2k. Now if She came up with a comprehensive $1 trillion mortgage and debt re-structuring package I'd be impressed. But that would take a team of economists and corporate experts. As it is, She just deals in serious sounding yet warm-fuzzy sound bites.

[Rob]

"TAX and Spend". It rings as true as the Jimmy Carter bell curve. "Borrow and Spend" my clueless friend? I think in that bag of sarcasm were reaching for "Invest and Spend". One can only hope.

[Ragnar]

Yet another reason why I will not be voting for Hillary Clinton. If she wanted to appear socially responsible, at least she could peddle some programs to help the poor or help poorly-funded schools or something. People need to understand that there is always risk in borrowing to own a home. Taking out a larger mortagage than one should just because one can is rarely a good idea.

[Cal]

Ben,

Even if your math is wrong, your point is right. But its still a billion dollar bailout, if ineffectual (which it would be) it makes it even worse.

[JK]

While I appreciate Hillary's concerns for people that are about to lose their homes, I am more bitter and resentful of the fact that I make nearly 100k and cannot afford a home in California. Using my tax dollars to help irresponsible people keep homes they can't afford, while at the same time keeping me out of the market, will be enough to send me over the edge, community credit repair groups or not.

The mortgage industry is a house of cards, let it collaspe and let prices return to normal.

[Katie]

Ok, seriously, what happened to consequences?? People should be wise in their home buying process. It is really frustrating that those of us that are careful with our money and resources are punished, while people that are irresponsible get bailed out by the government ONCE AGAIN. The whole "steal from the rich and middle class and give to the poor" mentality is not the way to really help the poor. It isn't the government's responsibility. That is the responsibility of nonprofits/churches/temples/mosques...orgs that are put in place to have compassion on the poor. That is why I will never be a democrat. I'm tired of paying taxes to people who use their welfare money on drugs and sex, and totally ignore their kids. Now I get more of my tax money going to people that suck at common sense. Great. Anyone know of a good place to move...because we're gonna be just like Canada and Europe, and that is not a good thing.

[Pop]

"When did Democrats give up on personal responsibility?"

1962?

[rick danger]

How about the people who lied on their loan application, don't they have any accountability?

"the information provided in this applicationis true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentationof this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation on that I have made on this application, and/or criminal penalties including but not limited to fine or imprisonment or both under the provisions of title 18, United States Code......" I guess she thinks there are more votes with a bailout.

[Eric W.]

I really want to believe that some value is added by these user comments, but honestly, all that's happening here is that people are responding to statements that Senator Clinton did not make. The blogger, Mr. Viles, referred in his title to a "$1 billion bailout," so people -- without even reading the AP article (!) -- are mistakenly enraged that Senator Clinton has proposed bailing out struggling homeowners.

That's ludicrous. As some have noted, $1 billion wouldn't even be enough to make a drop in the bucket. What she has proposed is spending $1 billion in federal funds to better educate homeowners and potential homeowners as to how mortgages work, their options when facing foreclosure, etc. A noble goal is these unsettled times, when the alternative is more uncertainty, which benefits no one.

I realize there are sourpusses out there (most of them seem to spend a lot of time on blogs) who think any education programs are a waste of money, since gosh darn it, the recipients should have read their mortgage docs cover to cover. But we live in the real world. If we want a more stable economy, if we want continued health in the housing market, if we want long-term growth without wild whipsaws, we owe it to ourselves to educate those entering the market, so they can make good choices.

[CeW]

This is not about a right-left agenda but about common sense. Yes there was stupidity (the sub-prime suckers) but there was also greed (the whole real estate industry). Lets not forget that any bail-out would help the lenders too which I don't think is on any leftist agenda. Have HRC and her advisors really thought this through? Guess what- us lefties want to buy homes too and a market shake-out is desperately needed now to bring homes (which are 10X the median income right now acording to LATimes article on Sunday) into the realm of affordability.

[Angela]

I think the title of this blog is unfair and misrepresents what Hillary is trying to do. She is proposing to fund non-profit credit counseling centers to help homeowners avoid foreclosure. She is not proposing a bail out, period.

[Pete Viles]

Thanks, Eric. Just to be clear, here is Sen. Clinton's policy proposal regarding the $1 billion foreclosure prevention fund. It's certainly sounds like some of this money would be given directly to homeowners who have fallen behind on their loans. That may be a "small" bailout, or a "partial" bailout, or a "token" bailout, but it is, by my definition, a form of bailing people out:

• Establish a $1 billion fund to assist state programs that help at-risk borrowers avoid foreclosure. Hillary will establish a $1 billion fund to support state programs that help at-risk borrowers avoid foreclosure. Some state programs help borrowers make the single payment necessary to become current on their loans; others help borrowers renegotiate their loan terms, or simply provide financial counseling. These foreclosure mitigation efforts are more important than ever right now. Federal assistance for state programs that assist at-risk borrowers supplements Hillary's call earlier in the year for "foreclosure timeout." At-risk borrowers and lenders should be encouraged to work out alternatives to foreclosure.

[Johnny C.]

CA gets 500,000 new residents every year, but only builds housing for 250,000. So we get problems like two-income households that are competing with each other to buy a crappy $700,000 house, or 12 day laborers living in one rental unit. Home ownership went up to almost 70% from 65% in 1995, but many of those last marginal buyers shouldn't have been in the market and they ALREADY cost the rest of us by bidding up prices. Let this unwind naturally, not with a preemptive government bailout that will simply transfer the pain.

[Nova]

Mary G. is correct. Ms. Clinton is not proposing a bailout of homeowners who irresponsably purchased loans that were eventually to become above their means to repay. She is offering federal assistance to state and local credit bureaus to assist homeowners who made bad decisions and now face losing everything.

[Nova]

(continued) Lenders who offered "liar loans" are more culpable than the homeowners. They should be slapped down. Do you think for one minute that any of them thought, ' this person doesn't see the potential risks; I should not offer him/her this loan"? Restructured loans would be a very big help, not only to the homeowners themselves but also to the real estate/lending industry and the U.S. economy in general.

[Nova]

(continued) Just to provide context, I am 52 years old and rented most of my life but purchased my first house one year ago. I couldn't afford it until my Mom passed and I received some life insurance money. Still, I work in WLA, live in Moreno Valley, and commute 170 miles round-trip per day in order to pay my mortgage. I had relatively good training in personal finance from my parents and knew not to go for an apr loan. However, I understand that not all U.S. citizens have had the same upbringing as I have. Isn't America about helping those less fortunate than yourself? Clinton's proposal sure beats the various benefit-the-billionnaires policy of the Bush White House including the nightmare of Iraq, even if Dick Cheney didn't profit big-time from Halliburton's no-bid gift of gajillions of taxpayers' bucks to work on Iraq's infrastructure.

[Massimo]

Hillary gets elected, I'm moving to Canada!

[albert]

Hey , if we can afford a trillion dollar war , we sure can gather up half of that to help *troubled* house owners ! LOL .

[Michelle L.]

The goverment or non-profit should not bail out the people that are being forclosed. People like Roland Arnall (Owner of Ameriquest) leaders of predatory lenders should be forced to use their profits to bail these people out. They're lucky enough not to go to jail, they should atleast clean up some of the mess that they created.

[Melissa]

First of all, I obviously don't support Hilary's housing proposal, but to all the people saying "tax and spend", give me a break. Maybe we should borrow money from other countries to pay for problems in the US just like we did for the last 7 years.

Or, maybe someday our Gov't can properly manage the budget/deficit and set a good example for its home buying citizens.

[homeowner inneed]

I can't wait. I got ripped off by my loan officer. He really took advantage of us. Hopefully I can get some aid so I can still live in my house. It seems like most people don't have any compassion for those of us that got taken advantage of. The government should be giving aid to people like myself.

[yvonne]

I don't even think the mortgage education program using our tax$ is a good idea.
Those who made irresiposible decisions are not children.
They should already know how to spend money.
It's just that there are some people who can learn only from their mistakes.
They should learn lessons through the experience of losing their homes.
So should the lenders.
This county cannot afford such a generous program anyway, having such huge debt as a country.
There are so many other issues that need to be solved.