Subprime bailouts would get costly - Apr. 13, 2007
What the heck. We bailed out the S&L industry (well, liquidated it might be a better choice of words). Now the proposal is to bail out the homeowners who gambled and lost in the subprime mortgage market on homes that they couldn't afford. I wonder if there will come a time when somebody proposes a taxpayer bailout for HOAs that didn't set aside enough in reserves to maintain their common areas.
NEW YORK (Money) -- Want to pick up the check for every homeowner who got saddled with a risky mortgage? It's a big one - on the order of $120 billion. Lawmakers and consumer groups in recent weeks have been calling for assistance for those at risk of defaulting on their mortgage. On Wednesday, Congressional Democrats led by Charles Schumer (D-N.Y.) advocated steering hundreds of millions of dollars into nonprofits to help the growing number of homeowners who are having trouble paying their mortgage. But economists and industry experts say the cost of a bailout would be significantly more than that. Christopher Cagan, director of research at First American CoreLogic, says rising mortgage payments on adjustable rate loans will force 1.1 million homeowners into foreclosure over the next 6 years. He estimates the cost of paying off the debt for those borrowers would be $120 billion.