Saturday, November 21, 2009

Still socializing the losses.

Sunday's NY Times has a report on the latest scam involving home mortgages. The latest iteration appears to help homeowners by reducing loan amounts, but in the end, we the taxpayer are on the hook for any losses and the vulture funds pocket all the profit.
Investment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.

While homeowners save money, the arrangement shifts nearly all the risk for the loans to the federal government — and, ultimately, taxpayers — at a time when Americans are falling behind on their mortgage payments in record numbers.
Creative financing at its best, if you are making the profits. Ruthless exploitation of a program designed to help homeowners, perverting it to raid the public treasury if you are an ethical human being.

// posted by montag @ 7:51 PM
Comments:
Not the best news for home owners, is it? Yes, that includes higher mortgages: http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=F0VMMQE83OP&preview=article&linkid=9fcc066c-af19-4f44-83ea-ae6a4daaa761&pdaffid=ZVFwBG5jk4Kvl9OaBJc5%2bg%3d%3d

Sincerely,
MediaMentions
# posted by Anonymous Anonymous : 11:11 PM
 

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