Government Bailout Doesn’t Help People Refinance Their Homes

So far, the government bailout we have spent staggering sums of money on has been a colossal failure. Unless, of course, you’re the CEO of a major financial institution.

Foreclosure rates are still soaring all across the United States, with more than 80,000 in September alone. Why? Because people can’t refinance their homes because of depressed home values.

Government efforts to help struggling homeowners may look good on paper. But they won’t help the majority of people facing foreclosure. In most areas of the country, property values have dropped quite a bit. As a result, millions of Americans owe more on their mortgages than their homes are worth in today’s market.

When you refinance a mortgage, you are essentially replacing the original loan with a new one. But you can’t do that if you’re “upside down.” You cannot replace a bigger mortgage with a smaller one. Here’s the part that really sickens me. The government knows this, yet their so-called bailout plan continues to pump billions into the coffers of these financial companies. And if anybody tells me how this money will “trickle down” to consumers, I will smack them in the mouth.

The only people benefiting from this bailout funding are the CEOs with the financial companies. But you cannot force a bank to offer refinancing to struggling homeowners, or to give out purchase loans to home buyers. The banks are not making loans. The money is being poured into the top of the wealth pyramid, but none of it is reaching the base. People trying to refinance their home loans are not getting any benefit at all.

Let’s take, for example, the new FHA “Home for Homeowners” program. This program is designed to help at-risk homeowners (people facing foreclosure) by allowing them to refinance their ARM loans into 30-year fixed mortgages with lower rates. But the FHA is merely backing the loans — the person trying to refinance still has to apply through a private lender. And these applicants are being turned away in droves because they owe more than their homes are worth.

The first enormous bailout package did not work. More than $700 billion was pumped into Wall Street, but it did not “trickle down” to Main Street as intended. This was clear to anybody with an economic IQ above 50. So what did the government do next? They passed another bailout bill, to the tune of $90 billion.

I try to remain calm. I try to be rational and understanding. After all, these are tough times for us all. But how could our “leadership” be so financially inept? The answer, of course, is that they are anything but inept. They are shrewd and merciless. They know they can pass any legislation imaginable if they use words like “crisis” and “emergency.” This is how we lost so many of our privacy rights due to the Patriot Act — they scared the public into allowing the bill. And here we are again, being scared into silence.

The bailout bill does not help people who are trying to refinance their homes. In fact, it doesn’t help anyone on “Main Street” at all. It is a shameless attempt to use taxpayer dollars to prop up financial institutions — the same institutions that are taking people’s homes away.

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