HAMPing their way to recovery

Posted: 28 August 2010 in Uncategorized
Tags: , ,

The Home Affordable Refinance Program has nothing to do with assisting struggling homeowners. It was designed and implemented to help banks “earn” their way back to financial health.

That’s what Zach Carter concludes from all the available evidence.

The initiative lowers monthly payments for borrowers, but fails to reduce their overall debt burden, often increasing that burden, funneling money to banks that borrowers could have saved by simply renting a different home. But according to recent startling admissions¬†from top Treasury officials, the mortgage plan was actually not really about helping borrowers at all. Instead, it was simply one element of a broader effort to pump money into big banks and shield them from losses on bad loans. That’s right: Treasury openly admitted that its only serious program purporting to help ordinary citizens was actually a cynical move to help Wall Street megabanks.

The key is, banks don’t have to reduce the amount borrowers owe, just the amount they pay each month. So, banks get to keep those mortgages on their books, as assets, and the payments (whether or not they’re actually coming in) as income.

The result is that banks, which otherwise would have failed, get to stay in business and keep on reaping profits (and paying out bonuses), while homeowners are forced to fork over more money to the banks or walk away from their homes.

And, as it turns out, that was the plan from the start.

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