The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.
Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.
As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.
Go read the whole article. Conservatives tend to speak of these kinds of harms to underwater homeowners and financial markets as “unintended consequences.” That’s terribly wrong, I think.
Politicians should know better than to enact such laws. They ought to take some care in how they do their job — just as electricians, doctors, and even garbage collectors do. That includes investigating the likely effects of proposed laws — rather than hand-waving them away with the thought that they mean well. If they fail to do that due diligence, we are entitled to think them negligent — or worse… that they intend their laws to fail so as to excuse even more violations of our property and contract rights.
Let’s make sure that we call the spade that’s digging our mass grave “a spade,” not an “unintended consequence.”