There are a couple of reasons the government has in interest in keeping the mortgage industry from melting down.
The first is that a complete melt-down of the real estate industry would probably put us in a deep recession and possibly a depression. The damage to the economy would be more painful that the tax hit.
The second, it is the government that got us into the mess. Granted the lending industry as a whole was making loans that don’t make alot of sense but we live in a capitalistic society and the federal banking policies made it very profitable to make and flip loans which were covered with cheap and easy funds coming out of the fed. The government did not restrict this activity which is okay but they dried up the cheap money from the fed. Suddenly the lending industry ran into a cash crunch and couldn’t meet their obligations. On one hand, it’s easy to say too bad for them but those organizations are vital to our economy on multiple levels. Their faltering not only affects the real estate market, furthering the melt down we are seeing now, but has far reaching affects including undermining our already weak dollar.
If the problem was not fundamentally caused by the government and so potentially damaging to every American, I would say just walk away. But this is huge, and could hurt every American from rich to poor.
None of this applies to CA...so it really doesnt have an affect...
I will have to see how the program plays out...but if the poor people want to keep their homes, they can be put into 40 or 50 year mortgages.
Of course, no help should be extended to anyone who took money out to buy an SUV, flat screen TV and Wii.
and at 200,000 loans....it really isnt a large program...there are over 100,000 homes for sale now in Phoenix alone....a flippers paradise.