President's Homeowner Affordability and Stability Plan

[mheslep]

The recently announced $275B http://www.whitehouse.gov/blog/09/02/18/9-million-plus/#TB_inline?height=220&width=370&inlineId=tb_external" states that it intends only to reach 'millions of responsible home owners'. Indeed, Press Sec. Gibbs said today that the bailout is for ''those who have acted responsibly, played by the rules...". Yet the Stability part of the HASP will apply to those with payments up to 38% of income. A debt load that high means it includes sub-prime borrowers. It includes those who took a flyer with interest only heavy back-end loans, of which they took no heed because they were initially intent on flipping the house. In the words of the plan:

...Millions of hard-working families have seen their mortgage payments rise to 40 or even 50 percent of their monthly income – particularly those who received subprime and
exotic loans with exploding terms and hidden fees.

Now how can these recipients all be called 'responsible'? The wording of this plan is, at least, misleading.

Compare:
Borrower: $220,000 mortgage at 38% of income. Plan reduces interest payments by $400/mo by using taxpayer dollars. If borrower keeps making payments receives additional $1000/yr for five years.
Renter: nothing.
Old School home owner that bought humbly and paid off early: nothing.

What's the lesson here? Be frugal, and BTW shut up and pay your taxes? Or buy the biggest house you can possibly get, the government will get you a pass.

For those who might criticize the plan, note that http://www.whitehouse.gov/the_press_office/Briefing-by-White-House-Press-Secretary-Robert-Gibbs-2-20-2009/" to heap condescension a CNBC editor: where and how he may live, and what he does for living:

Q -- there really does appear to be some anger out there from people who just don't believe the President when he said that only people who acted responsibly are going to be helped here. How can you assure people that you're going to reward only people, only homeowners who acted responsibly?

MR. GIBBS: Well, let's go through this, because I do think this is very important. And I've watched Mr. Santelli on cable the past 24 hours or so. I'm not entirely sure where Mr. Santelli lives, or in what house he lives, but the American people are struggling every day to meet their mortgage, stay in their job, pay their bills, to send their kids to school, and to hope that they don't get sick or that somebody they care for gets sick and sends them into bankruptcy.

I think we said a few months ago the adage that if it was good for a derivatives trader that it was good for Main Street. I think the verdict is in on that.

Here's what this plan will do: For the very first time, this plan helps those who have acted responsibly, played by the rules, and made their mortgage payments. This will help people who aren't in trouble yet keep from getting in trouble. You can't stay in this program unless you continue to make mortgage payments. That's important for Mr. Santelli and millions of Americans to understand...

 

[Ivan Seeking]

Now how can these recipients all be called 'responsible'?

Predatory lenders.

Have you ever bought a house?

 

[edward]

Greed. Mortgage brokers made more money if they sold loans with higher fees and interest rates. So borrowers would often be steered toward riskier products, even if a more traditional (and less risky) loan were available. "My income was directly proportional to the revenue I generated, and subprime was three to five times more profitable than any other type of loan we securitized," Bitner says. "I saw no logical reason to sell something that made less money and carried no competitive advantage."

EDIT link

http://narblog1.realtors.org/mvtype/theweeklybookscan/2008/08/

In short a loan originator made more by writting sub prime mortgages. They all drank the Kool Aid.

 

[mheslep]

Predatory lenders.

Yes they exist. How is that relevant to the above?

Have you ever bought a house?

Couple of them. Relevance?

 

[Proton Soup]

the problem may be that if you don't help these people keep their homes, then huge numbers of people will default and the government will be forced to either buy up the bad mortgages or let the banks fail. and the consensus seems to be that we don't want to let banks fail. so, even though this doesn't seem fair (neither is bailing out rich people to a bunch of poor folk) and shows favoritism, renters aren't carrying the same risk of bringing the whole house of cards down.

at least this way, you keep getting payments from them and limit your losses.

 

[mheslep]

the problem may be that if you don't help these people keep their homes, then huge numbers of people will default and the government will be forced to either buy up the bad mortgages or let the banks fail. and the consensus seems to be that we don't want to let banks fail. so, even though this doesn't seem fair (neither is bailing out rich people to a bunch of poor folk) and shows favoritism, renters aren't carrying the same risk of bringing the whole house of cards down.

at least this way, you keep getting payments from them and limit your losses.

Yes there's the issue of what to do about foreclosures in general. For the moment I object to the baloney in the selling of this plan ala all the borrowers are 'responsible'.

 

[Proton Soup]

Yes there's the issue of what to do about foreclosures in general. For the moment I object to the baloney in the selling of this plan ala all the borrowers are 'responsible'.

i think that "responsible" implies intent, which can be hard to judge. people with 2 or 3 mortgages so they can buy jet skis and refinance credit cards are one thing. folks who simply lack the mental toolbox to do the math and understand the terms of just what the heck they've gotten into are another thing. but yeah, some of it is simply placating political language.

 

[mheslep]

i think that "responsible" implies intent, which can be hard to judge. people with 2 or 3 mortgages so they can buy jet skis and refinance credit cards are one thing. folks who simply lack the mental toolbox to do the math and understand the terms of just what the heck they've gotten into are another thing. but yeah, some of it is simply placating political language.

Both of which qualify for money under this plan (if they meet a) <=38% of b) simply underwater )

 

[Ivan Seeking]

Yes they exist. How is that relevant to the above?

Couple of them. Relevance?

You are assuming that everyone with a bad loan was irresponsible. Keep in mind that the average home buyer is not an economics expert or a real estate lawyer.

The point about buying a home is that the paperwork is overwhelming. It is easy to see how people could get snookered. Many people just sign the papers without even knowing what they're signing and trust that the loan company is representing the loan honestly - which they are legally required to do.

There are stories emerging about people who qualified for a standard loan, but were sold subprime loans anyway. They were deceived by the loan company.

Note also that the bailout only applies to a person's primary home. This helps to exclude those who were simply buying and flipping houses; who were taking advantage of the hyperinflated market; who were taking advantage of exotic loans in order to make a fortune.

When we bought our house, I had a hundred questions about prexisting conditions on the propery, what can and can't be done by the current owners before we sign the papers... I don't remember the specifics anymore but I remember having many questions. The answer generally given was that the mortgage company and the title company take care of those concerns.

 

[mheslep]

You are assuming that everyone with a bad loan was irresponsible. ...

Not at all. I assume as stated that predatory lenders were out there and that some people were ripped off by them. I assume that many other borrowers were simply irresponsible, and they will none the less be rewarded by this plan. I assert that if individuals can not in large measure be held accountable for mortgages in good times and bad, then the entire mortgage system must fail, leaving housing only to the extremely wealthy or the government.

 

[Astronuc]

I am troubled/bothered by the government help/assistance on home affordability when it involves allowing people to keep ownership of their houses when they cannot afford payments. I'm also disturbed by people the claim that people were mislead by predatory lenders, because if these people did not understand the details of the financing, then they had no business buying a house and entering into a contract in the first place. It's a bit like making a promise and then claiming one did not understand the promise and therefore should not be held to the terms to which one agreed. Part of becoming an adult is to accept responsibility for one's actions. But I see a lot of irresponsible people expecting some forgiveness for their recklessness or irresponsbility. Bottom line is - if one makes a promise, one is expected to keep it or accept the consequences of not doing so.

I watched an interview with a home owner who could not afford payments on an $800+ K house, which had dropped in value by $200K. She and others like her are waiting for government assistance in order to keep their homes. Why in the heck is this woman and husband living in an $800 K home in the first place? Why didn't they just buy something they could afford? Why should people expect to live in expensive housing they cannot afford?

I bought a house that my wife and I could afford, and as time went on, the monthly payments have been about 20% or less of pretax income (taxes have about doubled or tripled since we bought the house, but we also doubled the size), and our house is still worth way more than the remaining principal. We rejected ARMs and other plans in favor a 30-yr fixed rate mortgage with a reasonable rate - as low as possible. We refinanced once after we used a construction loan to add a second story, and replace the old driveway which had deteriorated.

 

[russ_watters]

Part of becoming an adult is to accept responsibility for one's actions.

Agreed.

 

[Evo]

I am troubled/bothered by the government help/assistance on home affordability when it involves allowing people to keep ownership of their houses when they cannot afford payments. I'm also disturbed by people the claim that people were mislead by predatory lenders, because if these people did not understand the details of the financing, then they had no business buying a house and entering into a contract in the first place. It's a bit like making a promise and then claiming one did not understand the promise and therefore should not be held to the terms to which one agreed. Part of becoming an adult is to accept responsibility for one's actions. But I see a lot of irresponsible people expecting some forgiveness for their recklessness or irresponsbility. Bottom line is - if one makes a promise, one is expected to keep it or accept the consequences of not doing so.

I watched an interview with a home owner who could not afford payments on an $800+ K house, which had dropped in value by $200K. She and others like her are waiting for government assistance in order to keep their homes. Why in the heck is this woman and husband living in an $800 K home in the first place? Why didn't they just buy something they could afford? Why should people expect to live in expensive housing they cannot afford?

I bought a house that my wife and I could afford, and as time went on, the monthly payments have been about 20% or less of pretax income (taxes have about doubled or tripled since we bought the house, but we also doubled the size), and our house is still worth way more than the remaining principal. We rejected ARMs and other plans in favor a 30-yr fixed rate mortgage with a reasonable rate - as low as possible. We refinanced once after we used a construction loan to add a second story, and replace the old driveway which had deteriorated.

Absolutely agree.

I am completely against a bail out, with my tax dollars, for irresponsible people that bought homes they knew they could not afford . Why do these people deserve my money when millions of people are in danger of losing apartments due to losing jobs? They did nothing wrong, they didn't try to spend beyond their means. Yet now they are being told that they have to hand their tax money over to people that wanted things they couldn't afford?

I do not understand how this is even being considered.

 

[rootX]

I do not understand how this is even being considered.

I think they trying to invest too much in very limited amount of time ...

 

[Gokul43201]

Saying adults should take responsibility for their actions and I'm not going to bail out a bunch of irresponsible people with my money is okay for a philosophical argument, but becomes useless when it comes to implementing a working government policy.

Or else, you should stick with that argument, but take it to its logical end, and refuse to pay for the fire service that hauls someone out of a burning house because they screwed up and left the iron on. Refuse to fund FEMA's post Katrina operations because people weren't responsible enough to leave when told to. Going further, close down Social Security, shut down all welfare programs, stop funding public health initiatives, eradicate all import tariffs, and so on ... eventually you will find that you'd probably have to throw out most of Government if you take the "personal responsibility" argument to its logical end.

The way most modern governments work today, they are continually making life easier for people by drawing out of a common pool of money. In dozens of different ways that translates to people being bailed out by others for one reason or another. In that respect, the current bail-out of homeowners is different only in shape and size, but is still essentially the same as scores of other continuously operating bail-out programs that few people will question because they've become an ingrained part of our lifestyles.

 

[Astronuc]

Or else, you should stick with that argument, but take it to its logical end, and refuse to pay for the fire service that hauls someone out of a burning house because they screwed up and left the iron on. Refuse to fund FEMA's post Katrina operations because people weren't responsible enough to leave when told to. Going further, close down Social Security, shut down all welfare programs, stop funding public health initiatives, eradicate all import tariffs, and so on ... eventually you will find that you'd probably have to throw out most of Government if you take the "personal responsibility" argument to its logical end.

The way most modern governments work today, they are continually making life easier for people by drawing out of a common pool of money. In dozens of different ways that translates to people being bailed out by others for one reason or another. In that respect, the current bail-out of homeowners is different only in shape and size, but is still essentially the same as scores of other continuously operating bail-out programs that few people will question because they've become an ingrained part of our lifestyles.

Maybe it's time to end the subsidies by the government, and develop a fair and sensible policy that will mitigate future occurrences of what is now happening. Clearly the Bush administration policies failed, but so did the policies of his predecessors.

I agree with Reagan's concern about people developing a dependency on welfare programs, but he and others did not address the problem effectively - and we still have dysfunctional governments and welfare systems.

Many poor in New Orleans did not have the means to evacuate, or a place to where they could evacuate, but then the local (city), state and federal governments failed to protect them. That failure was simply a consequence of an evolution of dysfunctional governments, including simple basic corruption.

One of the systemic flaws in the American economy is a gross inequality/disparity in income (and wealth) - and I'll post about that later.

 

[mheslep]

Saying adults should take responsibility for their actions and I'm not going to bail out a bunch of irresponsible people with my money is okay for a philosophical argument, but becomes useless when it comes to implementing a working government policy.

Or else, you should stick with that argument, but take it to its logical end, and refuse to pay for the fire service that hauls someone out of a burning house because they screwed up and left the iron on. ...

I see where you're going but the analogy is flawed. The problem w/ bailing out the mortgages is that it encourages people to do the same in the future, without consequence. Burn your house down through stupidity or even from the most unpredictable accident and you will at the very least lose some irreplaceable property, and likely someone's life will be endangered. In addition the government can bring civil or even criminal charges if they can show you were really stupid/intentionally reckless, like storing certain banned incendiaries on the premises. Last, you might face increased home owners insurance premiums down the road. Clearly there are many disincentives in place for people to be reckless w/ burning their houses down, and no incentives caused by sending in the fire department to help them out.

 

[russ_watters]

Or else, you should stick with that argument, but take it to its logical end, and refuse to pay for the fire service that hauls someone out of a burning house because they screwed up and left the iron on...

One doesn't imply the other: a home foreclosure does not put one at risk of imminent death and a rescue from a fire does not provide an incentive for the person rescued to start another fire.

Refuse to fund FEMA's post Katrina operations because people weren't responsible enough to leave when told to.

Agreed. More generally, government bailouts of people who build homes in flood prone areas are a disgrace.

Going further, close down Social Security...

Agreed.

...shut down all welfare programs...

Most - not necessarily all.

...stop funding public health initiatives...

Again, most, but not necessarily all.

...eradicate all import tariffs...

and again...

... eventually you will find that you'd probably have to throw out most of Government if you take the "personal responsibility" argument to its logical end.

Yes.

Have you never considered these possibilities before? Personal responsibility is the driver of the conservative philosophy!

The way most modern governments work today, they are continually making life easier for people by drawing out of a common pool of money. In dozens of different ways that translates to people being bailed out by others for one reason or another. In that respect, the current bail-out of homeowners is different only in shape and size, but is still essentially the same as scores of other continuously operating bail-out programs that few people will question because they've become an ingrained part of our lifestyles.

Yes, that's correct: modern western governments today are actually quite socialistic and generally moving even further to the left. The US is actually one of the furthest to the right. But the fact that they work that way doesn't automatically make it right. To a conservative, the socialistic nature of these governments is essentially slapping a yoke onto the backs of the productive to pull the unproductive with them. It is the antithesis economic freedom which is one of the more important freedoms on which western government was originally founded.

 

[Ms Music]

Have these "responsible" buyers ever thought about selling their home and buying something they COULD afford? What if government became real estate dealers? "You can't afford THIS house anymore, so I will just let you have this smaller one instead"...

The ONLY people I can sympathize with are those who have lost their jobs and unemployment in their town is high, their house has been on the market for sale for months, but all bids fall through, but they are TRYING to make payments. Those who have too much debt are just plain NOT responsible. And helping them isn't fair to me.

I feel like I am being punished.

I hate this subject... Why did I even post?

 

[Astronuc]

Have these "responsible" buyers ever thought about selling their home and buying something they COULD afford? What if government became real estate dealers? "You can't afford THIS house anymore, so I will just let you have this smaller one instead"...

One problem for many is that they owe more on the mortgage than the value of the house in the current market, so they'd lose money if they sold the house, and therefore would not qualify for a new mortgage. I'm not sure of the proportion of mortgage holders in this situation, but it may be as many as 30 to 50% in some areas.

Here's some more on the mortgage problem - Former HUD Chief Weighs In On Foreclosure Crisis
http://www.npr.org/templates/story/story.php?storyId=101027916

Links to other articles on the matter.

 

[Gokul43201]

Have you never considered these possibilities before?

Of course I have. I consider myself more libertarian than anything else. But knowing that there's no way in hell government is going to look anything like I might want to see (which would require throwing it all out and starting from scratch) and expecting only that incremental changes will be made at any time, I find that small changes towards a more libertarian system only seem to make things worse, so I often (but not always) settle for something that I am otherwise opposed to on principle.

 

[Ms Music]

owe more on the mortgage than the value of the house in the current market

My house has dropped in value also. But thankfully I am still able to pay my mortgage. So why are my tax dollars paying for the people across the street that bought at a high LTV, then got a 2nd mortgage and bought a boat and a new truck to tow the boat? I can't sell my home for what the county assesses taxes my property either.

I can't see any way of making this fair. Helping them hurts me.

 

[Astronuc]

My house has dropped in value also. But thankfully I am still able to pay my mortgage. So why are my tax dollars paying for the people across the street that bought at a high LTV, then got a 2nd mortgage and bought a boat and a new truck to tow the boat? I can't sell my home for what the county assesses taxes my property either.

I can't see any way of making this fair. Helping them hurts me.

I'm not sure those people who took a home equity loan or second mortgage will qualify. AFAIK, the mortgage assistance only applies to the primary mortgage, not a home equity loan or second mortgage, especially if it was used to buy a boat and truck.

 

[Art]

There's a better way of helping distressed homeowners without hurting other taxpayers.

In the UK some years back, to help lower paid workers buy homes local authorities introduced low start mortgages. Under these the local authority kept a share of the house equity. The plan being that in the future when the original loan was cleared the homeowner could then buy back the rest of his house equity through a further loan. In the event the homeowner died or sold up the council got it's share of the equity from the sale of the property.

Such a plan could be easily redrafted to help homeowners in the US without actually subsidising them with other people's money.

 

[WhoWee]

There are 2 issues at hand (1) home values and (2) payment terms...they are very different things.

To make a comparison, the Dow fell 250 points to 1997 values today.

http://money.cnn.com/2009/02/23/markets/markets_newyork/index.htm?postversion=2009022318

Nobody would ever suggest the government try to prop up 401K values or cover margin calls...even though both (homes and investments) are assets...and many people approached home buying as a speculative venture since 1997.

Home (land) values (just like the stock market) need to correct...we can't prop up the prices artificially - it will lead to even more people will buying over-inflated assets.

As for payment terms...every troubled mortgage COULD be renegotiated without forcing the financial institution to take a loss...50 years...75 years...whatever it takes...even if you currently have no income, within a year or two, you should be able to resume payments.

If you paid $800,000 for an asset that was worth $300,000 (you made a mistake) but you'll have a very nice roof over your head for the rest of your life. Hopefully your kids will be able to pay it off. Unlike a car that only has a useful life of 10 to 15 years...a house will outlast most lifespans. There are plenty of 100 year leases on the books in the business world.

 

[mheslep]

Have these "responsible" buyers ever thought about selling their home and buying something they COULD afford? ...

Too late. Housing has depreciated, so many are underwater. That is, if they sold the house the proceeds would not cover the mortgage on it.

 

[WhoWee]

Too late. Housing has depreciated, so many are underwater. That is, if they sold the house the proceeds would not cover the mortgage on it.

That's why it's better to re-write the loans...lengthen the terms...as the economy rebounds, some of the values might increase.

The main obstacle right now is banking regulations...not cash reserves.

 

[Astronuc]

Somebody mentioned today that the government should get an effective lien on any property, which the government subsidizes, such that in the future when the property is sold, the profit goes to the taxpayers, i.e. no owner receiving government subsidy profits from the sale of the property.

I'd settle for the subsidy being repaid with a reasonable interest. Seems fair to me.

 

[WhoWee]

Somebody mentioned today that the government should get an effective lien on any property, which the government subsidizes, such that in the future when the property is sold, the profit goes to the taxpayers, i.e. no owner receiving government subsidy profits from the sale of the property.

I'd settle for the subsidy being repaid with a reasonable interest. Seems fair to me.

Repaying a subsidy with interest is one thing...taking the profit on the sale is an entirely different objective.

Are there any loans out there that Freddie and Fannie haven't touched? That is a VERY slippery slope...taxation without representation would take on a whole new meaning.

 

[Astronuc]

Repaying a subsidy with interest is one thing...taking the profit on the sale is an entirely different objective.

Are there any loans out there that Freddie and Fannie haven't touched? That is a VERY slippery slope...taxation without representation would take on a whole new meaning.

How about repaying subsidy + interest + a portion of the profit pro-rated on the basis of the ratio of the subsidy to the principal?

 

[WhoWee]

How about repaying subsidy + interest + a portion of the profit pro-rated on the basis of the ratio of the subsidy to the principal?

I guess my problem is in regards to all of the things being discussed relating to business transactions...specifically the value of a written contract.

In the business world, a contract governs the relationship between parties and is enforceable in court.

The government plays by a different set of rules. First they set the lending rules and manipulate Fannie/Freddie and interest rates. Then they "encourage" banks to take TARP funds that some didn't want and (at the time it seemed) no strings attached and "accept" Preferred Stock...because it has a higher priority of repayment in the event of failure.

Now, there are reports of a shortage of oversight of TARP administration and new rules are suggested. It started with wage caps and suggestions regarding not holding any events in Las Vegas (for instance)...and conversion of the Preferred shares into common shares. Converting the shares means they are less interested in a stable investment and more interested in control.

The government has a long history of saying one thing and doing something else...usually for political expediency.

 

[Jimmy Snyder]

Of course liberals love this plan. What makes me laugh is the people who support it and call themselves conservatives.

 

[Gokul43201]

Of course liberals love this plan. What makes me laugh is the people who support it and call themselves conservatives.

That is funny (almost as funny as the people who've supported Bush calling themselves conservatives).

 

[Gnosis]

Absolutely agree.

I am completely against a bail out, with my tax dollars, for irresponsible people that bought homes they knew they could not afford . Why do these people deserve my money when millions of people are in danger of losing apartments due to losing jobs? They did nothing wrong, they didn't try to spend beyond their means. Yet now they are being told that they have to hand their tax money over to people that wanted things they couldn't afford?

I do not understand how this is even being considered.

Why assist homeowners rather than renters? The reason is fairly straightforward.

Failing renters aren’t defecting on any kind of mortgage therefore, there’s little risk that the owner of the apartment property will default on their mortgage. They’ll simply find another renter, which is business as usual in the rental property game.

However, if homeowners continue to default on their mortgages, the already troubled banking industry moves ever closer to a total collapse and the result will be another “great depression”, which is something that should be averted at all costs. Just ask the elderly who actually lived through the “great depression” (as my grandparents and parents had to endure) and most will tell you; their next meal was never a certainty and there was plenty of hunger to go around, as well as some damn cold winters where heat was a luxury that couldn’t be afforded by a great many.

It makes sense that priority must be given to those in jeopardy of defaulting on their mortgages hence, aid to the millions of troubled mortgage holding homeowners.

Ideally, I’d also rather not have any part of bailing out business or private debts, but the time has come to do all that is within our power to hopefully circumvent another great depression. If we fail to avert another great depression despite our best efforts, at least we won’t be saying, “Why didn’t we at least try to prevent the banks from failing by assisting the banks, industry, and homeowners financially as much as possible while we had the opportunity to do so?”

The old adage; “An ounce of prevention is worth a pound of cure” certainly applies here.

This bail out is a relatively small cost considering how bad life could easily and quickly become during another great depression, and there’s no knowing how many years it might take to recover. In many respects, we are in an even worse position than at the time of the 1929 Great Depression! Just look how many stores and businesses have recently gone under and the final tally isn’t anywhere near complete, it’s only just begun. Some food stores have even gone under in my area. I can live without a surplus of money, but a lack of food? I’d rather pass away in my sleep than be hungry, as I surely like the groceries!

Here’s a link to the Great Depression. I suggest everyone read it and seriously ponder the ramifications if our bailout efforts should prove fruitless. I can tell from the various viewpoints that most of you are conveying (as though we have a choice for the bailout, but we don't at this point) that you have absolutely no idea of how bad it could actually get...

http://en.wikipedia.org/wiki/Great_Depression

 

[mheslep]

Why assist homeowners rather than renters? The reason is fairly straightforward.

Failing renters aren’t defecting on any kind of mortgage therefore, there’s little risk that the owner of the apartment property will default on their mortgage. They’ll simply find another renter, which is business as usual in the rental property game.

Is it? Have you ever owned rental property in bad times? (I have and I assure you its not simple).

In any case that misses the point of the OP. It is not about landlords, it is about renters that responsibly decided not to buy and take on some widely speculative mortgage. Now to some degree they must see an opportunity cost in that decision based on the thousands of dollars about to flow to those, some of whom were surely reckless. So now this mortgage plan must be seen as possibly effecting their future decisions to act responsibly.

However, if homeowners continue to default on their mortgages, the already troubled banking industry moves ever closer to a total collapse and the result will be another “great depression”, which is something that should be averted at all costs. Just ask the elderly who actually lived through the “great depression” (as my grandparents and parents had to endure) and most will tell you; their next meal was never a certainty and there was plenty of hunger to go around, as well as some damn cold winters where heat was a luxury that couldn’t be afforded by a great many.

Anybody not a first generation American probably has family that can tell them about the Great Depression Gnosis (I do), you might consider their experiences vary considerably.

It makes sense that priority must be given to those in jeopardy of defaulting on their mortgages hence, aid to the millions of troubled mortgage holding homeowners.

Ideally, I’d also rather not have any part of bailing out business or private debts, but the time has come to do all that is within our power to hopefully circumvent another great depression. If we fail to avert another great depression despite our best efforts, at least we won’t be saying, “Why didn’t we at least try to prevent the banks from failing by assisting the banks, industry, and homeowners financially as much as possible while we had the opportunity to do so?”

The government is aiding the banks, and at a fairly steep cost to the banks, but this thread is about the mortgage assistance aspect.

...This bail out is a relatively small cost considering how bad life could easily and quickly become during another great depression, and there’s no knowing how many years it might take to recover. In many respects, we are in an even worse position than at the time of the 1929 Great Depression! ...

The current situation has some similarities of scale to the recession of the 70s, not the GD.

http://en.wikipedia.org/wiki/Great_Depression

Here's another link:
http://en.wikipedia.org/wiki/Moral_Hazard