Subprime Lenders Getting U.S. Subsidies, Report Says

I hate to say this, but it seems like they’re doing more of the same crap that started us down this road. This time, taxpayers are directly subsidizing it on the front end (by giving lending institutions the money to lend to people who can’t afford homes) rather than on the back end (by bailing out lending institutions that were going broke because they gave loans to people who couldn’t afford homes and couldn’t afford to pay back the loans). Since we’re not directly bailing out failed institutions, but instead giving them the money so they won’t fail, most people won’t notice that this is just a variation on a theme (and the “theme” is: screw the taxpayer).

From The Washington Post:

Many of the lenders eligible to receive billions of dollars from the government’s massive foreclosure prevention program helped fuel the housing crisis by issuing risky subprime loans, according to a report to be issued Wednesday by the Center for Public Integrity.

Under the $75 billion program, called Making Home Affordable, lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations.

Much “of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place,” Bill Buzenberg, executive director of the center, said in a statement.

For example, J.P. Morgan Chase, Wells Fargo and Countrywide, which has been bought by Bank of America, are eligible to receive billions of dollars under the program, according to the report.

The report comes as the Obama administration is prodding lenders to do more to help borrowers. Less than 10 percent of delinquent borrowers eligible for assistance through Make Home Affordable have received help, according to Treasury Department estimates released this month. The administration is aiming to more than double the number of borrowers helped under the program to 500,000 by Nov. 1.

Read the rest:

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/25/AR2009082502975_pf.html

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