New Mortgage Bailouts Cause Controversy

There is a new TARP program that is designed to help troubled homeowners with their mortgage payments in ten states. However, there is a lot of controversy surrounding this new program.

Some people, like Florida’s Anna Aquino, are calling the new program a “government handout.” Aquino is a homeowner in Kissimmee, Florida, one of the states that is participating in the new program. She is afraid that they new program is going to further spoil Americans to always expect the federal government to help them out of their financial problems. She believes it is not up to the federal government to bail out every person who is going through financial difficulties. However, the new program is scheduled to take effect later this year.

On the other hand, the Florida Housing Finance Corporation says the new TARP program is not about bailing out those who have simply made bad choices with their investments. Instead, it is designed to help those distressed homeowners who were “caught off-guard” by the recent economic crisis that the country has found itself in. As such, only the homeowners who are able to prove their hardship will be able to qualify for the financial help. Their proof of hardship must include losing their job through no fault of their own or losing the government benefits. That is one way the program will weed out the ones who simply made bad financial investments.

The top five states for receiving part of this $2.1 billion of federal money are Arizona, California, Florida, Michigan and Nevada. Those are five of the hardest hit states in terms of foreclosures, job loss and overall economic problems. The other five states include South Carolina, Rhode Island, Oregon, North Carolina and Ohio.

Some states have already submitted their ideas for using the money to help trouble homeowners. Florida, for example, has proposed making nine months of a distressed homeowner’s mortgage payments in exchange for the lenders agreeing to forgive nine more months of payments. Arizona has proposed to match the lender’s amount of loan forgiveness up to $50,000. In Florida alone, the allotted $418 million for the state is likely going to help about 12,000 homeowners in the state get back on their feet by helping them with their mortgage payments for a period of time.

Still, critics are annoyed that the tax dollars of responsible Americans and hard-working homeowners are being used to help those who made a bad decision to purchase a home with a mortgage that they could not afford.

How do you feel about this new program? Are you like the critics who say that the responsible Americans are always bailing out the irresponsible ones lately? Or do you think it is something that can truly help the economy while helping individuals keep their home? Let us know your thoughts!