Did you notice this little detail in the expansion of the HAMP loan modification program the Treasury Department announced last week?:
. . . Treasury will expand eligibility to include properties that are currently occupied by a tenant as well as vacant properties which the borrower intends to rent. This will provide critical relief to both homeowners that live in their homes and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties. Single family homes are an important source of affordable rental housing, and foreclosure of investor-owned homes has disproportionate negative effects on low- and moderate-income renters. [Emph. added]
Seriously? So now the federal government proposes to provide relief not just to owner-occupiers, but to investors whose gambles have gone bad, too? As a taxpayer, why should their problems be any of my business? They took a risk—and they lost. These are the same people, remember, who helped provide the last few blasts of air into the housing bubble. And many of them, to even qualify for a residential mortgage, surely committed fraud in the application process. And they’re getting some of my money? That makes no sense.
It makes no sense in particular since there’s no shortage of private capital standing by that’s eager to buy these very properties from lenders and GSEs, invest in them, and turn around and rent them out. This is one part of the problem where the solution doesn’t call for any involvement by the feds. Why they’re getting involved anyway is idiotic—and outrageous.