Further proving we haven't learned our lessons from the "free stuff" era of Covid "relief" that taxpayers funded and continue to pay for via out of control inflation, the government announced last week it is working on a way to
reward people who don't pay their bills "help struggling homeowners meet their mortgage obligations".
The program comes from the Federal Housing Administration, who posted a proposal for feedback on an initiative called "the Payment Supplement Partial Claim", which as the government's press release says, "would allow mortgage servicers to use the FHA Partial Claim both to bring a borrower’s mortgage current and to provide temporary reductions to their monthly mortgage payments for up to five years."
Ironically, the Department is citing high interest rates as a reason for implementing the program, stating "The rapid and steep interest rate increases of the past year have limited the effectiveness of some of FHA’s existing loss mitigation options in assisting borrowers."
Interest rate hikes were, of course, due to out of control inflation, which was the result of government "freebies" for those who couldn't pay their bills to begin with.
The release continues: "FHA’s widely used loan modification option, which has historically reduced borrowers’ monthly payments to levels they can afford, is no longer as effective as it once was because borrowers are forced to modify at market rates that may be higher than their current rates."
It says that it'll "allows homeowners experiencing a hardship who are unable to obtain a significant payment reduction with other loss mitigation options to keep their existing interest rate and reduce their monthly payment temporarily using funds from the FHA Partial Claim, which is a subordinate zero interest lien. The homeowners then pay FHA back when they sell their home or refinance."
Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon commented: “Many homeowners continue to experience hardships due to health or financial difficulties that occurred during the pandemic, and these challenges have been exacerbated for these and other borrowers by current economic uncertainties."
She continued: "When we saw that our existing loan modifications were no longer providing adequate payment relief, our team painstakingly explored every possible alternative to provide relief in the current rate environment, resulting in this innovative proposal.”
Maybe next the government can just give people who don't pay their mortgage direct access to the Fed's discount window?