Aug. 6, 2012, Fairfax, VA—Americans for Limited Government President Bill Wilson today issued the following statement praising Federal Housing Finance Agency (FHFA) head Edward DeMarco for refusing to implement a costly bailout for borrowers who owe more on their mortgages than their homes are worth:
“Edward DeMarco is to be credited for acting in the best interests of taxpayers by refusing to engage in political gimmickry that would lead to additional bailouts.
“In his role as the head of the Federal Housing Finance Administration, DeMarco has held the line against an Obama political publicity stunt to bail out underwater borrowers. A bailout would only make the current foreclosure crisis even worse by creating a perverse incentive for borrowers who are current on their payments to become delinquent in a misguided attempt to qualify.
“DeMarco’s review of the policy found that if as few as 3,000 borrowers strategically defaulted on their mortgages in an attempt to become eligible for the program, it would offset any taxpayer benefit derived from bailing out those who would currently be eligible — even in the best case scenario. From both the taxpayer and borrowers’ perspectives, there could not be a worse possible outcome than to offer false hope of a bailout that results in even more people losing their homes, leaving taxpayers with the bill.”
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