Can you spot what’s wrong with this ‘free lunch’ from President Obama? 

Washington Post:

The Obama administration announced new ways Friday to tackle the foreclosure crisis, in part by requiring lenders to temporarily slash or eliminate monthly mortgage payments for many borrowers who are unemployed….Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be the amount of unemployment insurance, for three to six months….The administration also seeks to more aggressively help borrowers who owe more on their mortgages than their properties are worth, offering financial incentives for the first time to lenders to cut the loan balances of such distressed homeowners. Those who are still current on their mortgages could get the chance to refinance on better terms into loans backed by the Federal Housing Administration.

Keith Hennessey:

Imagine twin brothers, each with $150K of annual income.  One rents, and the other has a $700,000 mortgage on a home that declined from $800,000 in value to $600,000 in value.  Both brothers lose their jobs.  Why should the renter pay higher taxes to subsidize his brother’s mortgage payments?

About The Author

David Freddoso

Bio:
David Freddoso came to the Washington Examiner in June 2009, after serving for nearly two years as a Capitol Hill-based staff reporter for National Review Online. Before writing his New York Times bestselling book, The Case Against Barack Obama, he spent three years assisting Robert Novak, the legendary Washington... more
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