May 12th, 2010
08:27 AM ET
5 years ago

States: Let taxpayers cover your mortgage

New York (CNNMoney.com) - Unemployed? Owe more on your mortgage than your home is worth? Your state might one day pay your mortgage.

Giving people free money to cover their home loans is just one of the radical ways that four states - Florida, Michigan, California and Arizona - plan to use $1.4 billion the Obama administration is sending their way to help the unemployed and underwater avoid foreclosure.

Many consumer advocates have said the government should help cover the payments of these troubled homeowners, lest the mortgage crisis continue spinning out of control and dragging down everyone's property values. But other housing experts warn that paying off loans creates a moral hazard and could actually dissuade people from looking for work.

Innovative programs, however, are exactly what the administration was hoping for when it unveiled the Hardest Hit Fund initiative in February. Officials are looking to help the unemployed and underwater, who are now at the heart of the crisis. Despite the administration's best efforts to stabilize the market, home prices are still sliding and foreclosure filings are at record highs.

Full story on CNNMoney.com


Filed under: Obama administration
soundoff (25 Responses)
  1. SLP

    This just burns me up. I live in a small home which my husband and I have worked hard to pay off. We have talked of buying a bigger home but just haven't felt that we could afford it easily. My husband is self employed and I am a teacher. My salary is stable (well it used to be) but my husband's business is up and down. Our house is paid for and no one can take it away from us. We have been responsible so why should we have to bail out people who got in over their heads because they wanted to keep up with the Jones? I know that there are alot of people out there who lost their jobs through no fault of their own, but many of these people didn't. Being responsible just doesn't pay off anymore.

    May 12, 2010 09:01 am at 9:01 am |
  2. t22

    What about paying off the mortgages of the people who have kept up with their payments. Then we can direct our savings into the economy. Let's stop rewarding the failed.

    May 12, 2010 09:02 am at 9:02 am |
  3. jp,michigan

    I hope the state of Michigan and other states will help senior citizens help pay their mortgage since , the Obama administration will cut medicare by 500 billion and we will have to pay more out of pocket. The increase of unemployed has cost the decrease of money into social security. Now is the time for the federal government to repay the money borrowed from social security years ago and maintain it's solvency. We are well on our way to a socialistic society, once the federal government and state government take over health-care and now mortgage payments!

    May 12, 2010 09:06 am at 9:06 am |
  4. Chessnutz of Liverpool NY

    This is why I'm paying over 60 % of my gross income in taxes, so that those who choose not to work can keep the homes they could not afford?

    May 12, 2010 09:09 am at 9:09 am |
  5. keith in Austin

    Classic Socialism! And who will those on the receiving end of Government-funded mortgage payments vote for in coming elections? Democrats of course! Get the picture taxpayers?

    "Give a man a fish and he'll eat once. Teach a man to fish and he'll eat for a lifetime." Democrat credo: " Make people dependent upon Government and you'll secure their votes for a lifetime! Wake up America!

    May 12, 2010 09:13 am at 9:13 am |
  6. Joe from CT, not Lieberman

    Here is what really bothers me. People like my wife and I who saved and looked and determined what our financial situation was managed to buy a house we knew we could afford on a 30y fixed Mortgage with our payments including our taxes and insurance. Yes, as a result of the decline in the housing market we did lose some value, but do not consider ourselves underwater. This is as opposed to people who were sold houses they really couldn't afford with variable rate mortgages under the assumption that they could sell the houses and turn a profit before the mortgage payments shot up. Now they are being helped to keep these houses that the banks should not have allowed them to purchase by taxpayers while my wife and I (and others) who played by the rules are left on our own!

    The only people in a housing predicament that I have any sympathy for are the ones who lost their jobs and are doing everything they can to keep the homes, that they COULD afford on their original purchase, that circumstances have occured that now cause them to not afford the same homes. They are the people who should be helped, not the dupes who overreached their purchasing abilities! I wish I knew a way that was fair, and not a knee-jerk reaction against the bean counters from their companies who figured out how to cut those jobs and save money!

    May 12, 2010 09:13 am at 9:13 am |
  7. Dave

    Unchecked and unaccountable liberalism at its finest.

    Bailouts, buying banks, car companies, giving money to Frannie & Freddie, etc.... it goes on and on and on.

    VOTE THEM ALL OUT.

    May 12, 2010 09:14 am at 9:14 am |
  8. Dan

    So after I get done paying for everyone's health insurance, I now have to cough up more money to help pay for everyone's house as well? Where does it stop?

    May 12, 2010 09:25 am at 9:25 am |
  9. Bedtime for Obonzo

    I'm a Michigan resident who has never been late on a hefty mortgage payment for more than 14 years. Guess I can stop paying now, and Jennifer Granholm will start writing checks to Citimortgage. Thanks a lot, suckers!

    May 12, 2010 09:31 am at 9:31 am |
  10. harvey

    what a joke! thousands, if not millions more homeowners will stop paying their mortgages and try to qualify for this assistance. what are they doing for people who pay on time every month? Nothing, just like they always do. better save the 1.4 billion for the oil spill cleanup, because BP, Transocean, and Halliburton won't be paying. Scalia and friends will cap their liability just like they did with Exxon Valdez. the only good thing might be that Nin will have to recuse himself because he went duck-hunting with his best friend, the former CEO of Halliburton, Dick Cheney. that will even out the odds.

    May 12, 2010 09:32 am at 9:32 am |
  11. susie

    This is a joke, right?

    May 12, 2010 09:39 am at 9:39 am |
  12. jenn, philadelphia

    "Giving people free money..." Exactly where does one get free money? I'd like to get some too.

    May 12, 2010 09:42 am at 9:42 am |
  13. Ron in California

    Hold a second.....while I feel bad for someone who has lost their job or whose hose is undrwater, why is it my responsibility as a taxpayer to bailout someone who may hav used poor judgement in buying a home or just had bad luck. While this is difficult, it will pass recessions and slumps always do.

    May 12, 2010 09:49 am at 9:49 am |
  14. demmie

    NO.NO.NO.

    come on ! out with the old, in with the new! If the old cannot make payments and lose their house, they must give it up! The homes will provide opportunity for others to own their first home. Greece is all teh evidence that we need that you cannot keep bailing people/businesses/et out

    May 12, 2010 09:58 am at 9:58 am |
  15. Bob

    Talk about a hot button issue that would set off a "peasants" revolt, you have one right here.

    During the great depression when there was migrations of millions of people who had lost everything, there was no "redistribution of wealth" to cover the less fortunate.

    Your home is your most cherished possession. By taxing it more to pay for the mortgages of those who would be foreclosed wrong. Federal, state and local governments have grown to large over the years. I say that drastic cuts in spending should be the way to cut state and local deficits along with Volunteer Corps to do some of the work that now gets done by a civil servant. Cut these governments by 25 % and get their house in order first.

    Lower taxes on businesses to attract them to your state and local area thus creating jobs so people can stay in their homes. This type of proposal is an "Atlas Shrugged" mentality. Load the doer down even more to pay for the inept government spending.

    May 12, 2010 09:59 am at 9:59 am |
  16. pc

    this would be the worst move in history. this would be so unfair to those of us that are struggling and giving up a good lifestyle just to pay our mortgages. neighbors would turn against neighbors creating a war of workers verses non-workers. if this is implemented i will stop paying every dime i have on my own debt and just let the goverment take care of me as well. soooooo unfair!!!

    May 12, 2010 10:03 am at 10:03 am |
  17. Anonymous

    Thanks my husband and I work three jobs to support our family and you want us to pay somebody elses morgage too

    May 12, 2010 10:08 am at 10:08 am |
  18. Dean

    I think it is time for responsible people to stop paying taxes.

    May 12, 2010 10:10 am at 10:10 am |
  19. Brink

    I trust that there will be a lien against these homes to pay back the money when they are sold, otherwise it is just welfare in another form.

    May 12, 2010 10:12 am at 10:12 am |
  20. Mike in NYC

    After decades of doling out trillions in AFDC and other entitlements to a permanent underclass, in the name of avoiding "social unrest," how could spending a few more billion hurt, in the name of "preserving neighborhoods"? We're all in this together, right?

    Every dollar spent will go to families who need it.

    Yeah, we've seen what happens when the government decides who "needs" it.

    May 12, 2010 10:13 am at 10:13 am |
  21. JP

    So now in addition to paying my mortgage I pay my neighbors mortage. Who is checking to see if my neighbor took equity out of their house to buy cars, vacations etc. I bet no one is checking. This is change I can't believe in.

    May 12, 2010 10:24 am at 10:24 am |
  22. Mark from Louisiana

    People are already turning down work because of the extended unemployment benefits, this will make it worse. Why work when the government will take care of you? Just another cradle to grave entitlement program, look how good that has worked for big cities like New Orleans.

    May 12, 2010 10:27 am at 10:27 am |
  23. thor

    How does this make the person that bought a house that he or she could afford? They took on the same risk that one would take on when buying a home.They pay every payment when due sometimes with difficulty but they do it because they honor their word.They may have even bought a little less at the time because they were affraid they may incur tough times.They never took a dime of taxpayer's money.Then someone else buys a house nicer than theirs and gets bailed out of their commitment with taxpayer"s money. Sometimes the debt is forgiven .Somtime the loans are reduced. What is wrong with this picture?

    May 12, 2010 10:31 am at 10:31 am |
  24. Brent

    Remind me again why I bother actually paying my mortgage each month?

    May 12, 2010 10:46 am at 10:46 am |
  25. Fair is Fair

    Let's see...

    My taxes are paying people's food, healthcare, utilities, education, cell phones, cigarettes, booze, heating, air conditioning, transportation, clothes, and child care already.

    I guess their mortgages were the only thing left.

    Sounds about right in liberal la-la land. Maybe it's time for my family to quit our jobs and live off the dole as well.

    May 12, 2010 10:57 am at 10:57 am |