Government Robs Working Renters to Subsidize Unemployed Homedebtors

The government has rolled out another program to give money to the banks by sending it through unemployed homedebtors.

Irvine Home Address … 304 ORANGE BLOSSOM 159 Irvine, CA 92618

Resale Home Price …… $297,700

Well I guess it ain't easy doing nothing at all oh yeah

But hey man free rides just don't come along every day

She sits on her ass

He works his hands to the bone

To give her money every payday

But she wants more dinero just to stay at home

Well my friend

You gotta say:

"I won't pay, I won't pay ya, no way

Na-na Why don't you get a job"

Say "no way", say "no way ya, no way

Na-na Why don't you get a job"

Offspring — Why Don't You Get a Job

With election season gearing up, politicians are seeing what voter groups they can buy off. Apparently, the unemployed homedebtors are a significant voter block this time around.

U.S. Plans More Aid for Jobless Homeowners


Published: August 11, 2010

In an acknowledgment that the foreclosure crisis is far from over, the Obama administration on Wednesday pumped $3 billion into programs intended to stop the unemployed from losing their homes.

So what has he done to provide aid to unemployed renters?

Unemployed loan owners already get to squat in relative comfort, eat three meals a day, and surround themselves with creature comforts whereas renters double up with friends or sleep in their cars. Yet, despite this obvious unfairness and disparity of benefits, the government sees fit to provide even more aid to homedebtors while unemployed renters get to sleep in shelters.

And how about you working renters who are continuing to subsidize these people squatting in homes that should be yours. As a working renter waiting for house prices to drop, you are paying the bills of the squatters living in what should be your home. How do you feel about that?

The housing market, which usually helps lead the country out of a recession, is this time helping hold the recovery back. Interest rates are at record lows, but too few can afford to buy or refinance. Unemployed homeowners who live in communities where values have fallen sharply are often unable to sell. Their foreclosures weaken neighborhoods and create a vicious circle by further undermining the market.

Did you notice the subtle emotional lie perpetrated in the sentence above? Foreclosures do not weaken neighborhoods. As written, the sentence conjures up images of slums and shantytowns. The truth is that foreclosures lower prices in neighborhoods, but then employed renters move in and buy these houses and strengthen the neighborhood. Lower prices makes existing homedebtors unhappy because their dreams of home equity wealth are revealed as sad fantasies. Loan owners who surrender their dreams of HELOC riches do not weaken neighborhoods. If anything, making people focus on adding value and working for a living will strengthen neighborhoods.

To try to break this pattern, the Treasury Department said it was adding $2 billion to its Hardest Hit Fund, roughly doubling its size. The fund, first announced by President Obama in February and expanded in March, goes to housing finance agencies in various states to create local aid programs.

Most of the state programs from the first two rounds are barely under way, but Treasury officials said it was clear that more funds were needed.

What they are really saying is that we have not been able to funnel this money to banks fast enough to repair their broken balance sheets. Nobody in the Treasury Department cares about homedebtors staying in their houses, their only concern is for the solvency and profits of lenders.

“In this very deep recession, people have tended to be out of work a little longer,” Herbert M. Allison Jr., assistant secretary for financial stability, said. “That’s why we think this additional relief for people searching for a job is so important.”

So do people submit paperwork and reports detailing their job search efforts in order to get this money? They make stealing from working renters and giving the money to the banks of unemployed loan owners sound noble.

The second program, announced by the Department of Housing and Urban Development, will draw on $1 billion authorized by the new financial overhaul law.

The agency said it would work with local aid groups to offer bridge loans of up to $50,000 to eligible borrowers to help them pay their mortgage principal, interest, insurance and taxes for up to 24 months. The loans will be interest-free.

Free money that can only be given to the banks. Unbelievable….

Somebody explain to me why this program is needed. With the HAMP program, borrowers can lower their interest rate to 2% and defer missed payments and interest by adding to principal like an Option ARM. Is this program intended to squeeze a few more payments out of those who are so hopeless that they can't make their payments under HAMP? If so, this is nothing more than a bridge for lenders to get 24 months worth of payments from the government from borrowers who have no chance of sustaining ownership. In short, it is theft by the banks.

Until now, the Hardest Hit Fund had been projected to help about 140,000 borrowers. Treasury officials said that number would grow with the new infusion of money, but offered no estimate. HUD also did not say how many homeowners would be eligible for its program.

If the new money is spent in the same way as the previous money, both programs would eventually aid about 400,000 borrowers — a large number, but not when set against the 14.6 million unemployed or three million contemplating foreclosure.

So there are 14.6 million unemployed and 3 million facing foreclosure. The government is flying the bird at the 11.6 million unemployed renters and homeowners not facing foreclosure.

Over the last two years, the government has deployed many programs to help housing. It pushed interest rates down, offered tax credits and set up an ambitious mortgage modification program. Yet housing remains feeble and seems poised after a brief respite this year to become weaker again.

“I think all these government programs are helpful, but I wouldn’t look for them to cure the recession or even what ails housing,” said the economist Karl E. Case. “At best, they’re preventing things from getting much worse.”

At best they are delaying the inevitable and finding new and innovative way to give tax dollars to banks.

The Hardest Hit Fund will draw on the $45.6 billion set aside for housing in the Troubled Asset Relief Program, the rescue measure begun at the height of the financial crisis in the fall of 2008. Initially, the fund gave $1.5 billion to five hard-hit states: Arizona, California, Florida, Michigan and Nevada. The second round in March of $600 million went to North Carolina, Ohio, Oregon, Rhode Island and South Carolina.

The expanded list of states eligible for the latest funding includes Alabama, Illinois, Kentucky, Mississippi and New Jersey, as well as the District of Columbia. Each state’s share of the money is based on its population.

Many of the programs involve direct assistance. Ohio, for instance, said it would use its $172 million to aid 15,356 homeowners by helping bring delinquent mortgages current for owners experiencing hardship because of a loss of income. The assistance will last up to 12 months.

The other housing money in the Troubled Asset Relief Program is earmarked for the modification programs ($30.6 billion) and a Federal Housing Administration refinancing program ($11 billion). The administration can shift money between the programs only until Oct. 3, the two-year anniversary of the program.

HUD said it was in the process of determining which communities would receive its money and how exactly the process would work. “We’re still in the design phase,” said Bill Apgar, HUD senior adviser for mortgage finance.

I am appalled by the way our government steals from us to pay for the mistakes of lenders and loan owners. Renters don't speak with a coherent political voice, and responsible homeowners are torn between wanting to see their illusory house prices maintained and not wanting to subsidize the bad behavior of irresponsible borrowers. The result is political inaction to stop the government theft.

Government officials dress up their theft with emotional bullshit about helping homeowners when in reality they are merely helping banks get a few more payments from the hopelessly overextended who are about to become renters again. This does nothing for neighborhoods nor for the borrowers themselves. This policy merely gives money to banks to encourage more bad behavior in the future.

Single women loved condos

Single women got involved in real estate in unprecedented numbers during the housing bubble. And why not? It was easier than applying for another credit card, there was more free money available, and most believed they would never have to pay it back. It really was the best of all possible worlds. Too bad reality doesn't work that way.

The buyer of today's featured property paid $243,000 on 8/15/2003. She used a $194,400 first mortgage and a $48,600 down payment. Not wanting to miss the gravy train leaving the station, she borrowed $360,000 on 8/24/2007 and withdrew her down payment plus $117,000 in spending money. Then she gave it back to the bank.

Foreclosure Record

Recording Date: 01/29/2010

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 10/29/2009

Document Type: Notice of Default

Foreclosure Record

Recording Date: 05/28/2009

Document Type: Notice of Rescission

Foreclosure Record

Recording Date: 03/31/2009

Document Type: Notice of Default

She got to squat for about 18 months before it was purchased at auction for $243,000 on 6/3/2010. The flipper put down some pergraniteel and is trying for a 20% margin. With the recent softness in the market, I doubt they get it.

If you would like to learn how you can get involved with trustee sales, please contact me at

Irvine Home Address … 304 ORANGE BLOSSOM 159 Irvine, CA 92618

Resale Home Price … $297,700

Home Purchase Price … $234,000

Home Purchase Date …. 6/3/2010

Net Gain (Loss) ………. $45,838

Percent Change ………. 19.6%

Annual Appreciation … 100.3%

Cost of Ownership


$297,700 ………. Asking Price

$10,420 ………. 3.5% Down FHA Financing

4.51% …………… Mortgage Interest Rate

$287,281 ………. 30-Year Mortgage

$58,249 ………. Income Requirement

$1,457 ………. Monthly Mortgage Payment

$258 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$25 ………. Homeowners Insurance

$250 ………. Homeowners Association Fees


$1,990 ………. Monthly Cash Outlays

-$134 ………. Tax Savings (% of Interest and Property Tax)

-$378 ………. Equity Hidden in Payment

$17 ………. Lost Income to Down Payment (net of taxes)

$37 ………. Maintenance and Replacement Reserves


$1,533 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$2,977 ………. Furnishing and Move In @1%

$2,977 ………. Closing Costs @1%

$2,873 ………… Interest Points @1% of Loan

$10,420 ………. Down Payment


$19,246 ………. Total Cash Costs

$23,500 ………… Emergency Cash Reserves


$42,746 ………. Total Savings Needed

Property Details for 304 ORANGE BLOSSOM 159 Irvine, CA 92618


Beds: 2

Baths: 1 bath

Home size: 864 sq ft

($345 / sq ft)

Lot Size: n/a

Year Built: 1977

Days on Market: 35

Listing Updated: 40387

MLS Number: P742736

Property Type: Condominium, Townhouse, Residential

Community: Orangetree

Tract: Cm


***PRICE JUST REDUCED!!!*** A True Turnkey Property with An Incredibly Open And Spacious Floor Plan Boasting High Ceilings, New Paint, New Carpet, CROWN MOLDING thoughout, HIGH END STAINLESS STEEL Kitchen Appliances, and GRANITE Countertops in Kitchen!!! Inside LAUNDRY & Updated BATHROOMS with GRANITE COUNTERS!!! Situated In A Quiet Location Of A Very Desireable Complex Located In The Heart Of Irvine. Close to Restaurants, Theater, Schools And Shopping. Enjoy the Pool, Basketball Court, Tennis Courts and Children's Play Areas on the Condominium Grounds!!! Perfect for First Time Home Buyers & Investors!!!

thoughout? Desireable?

The description is painful. It starts with asterisks and three exclamation points, then it lapses into Title Case with occasional ALL CAPS randomly thrown in for good measure.

A special thanks to Calculated Risk:

30 thoughts on “Government Robs Working Renters to Subsidize Unemployed Homedebtors

  1. AZDavidPhx

    Home size: 864 sq ft

    Children’s Play Areas on the Condominium Grounds!!!

    At 864 SQ FT you’d better hope those play areas come with bunks!

    All this for the low price of 300K!

    LOL! Oh Goody! Where do I sign?!

  2. Alicia

    “The loans will be interest-free.”

    And non-recourse.

    Of course.

    Hardly necessary to point it out I suppose.

    What else could they be.

    A. N. Idiot Who Pays the Mortgage

    ps Where is my handout?

    pps Would post the link to but it looks like the stampede for more free money has crashed the site, cynical LOL.

    I have visions of future archaeologists digging up huge numbers of granite countertops and concluding they must be some kind of religious artifact. And they’d be right. Mountains died for this?

  3. irvineneighbor

    That’s a very strange kitchen remodel. I’ve never seen the power outlet for an above range microwave put on the outside of the cabinetry. Why not hide it with the vent? I can’t see why anyone would do this – the kitchen doesn’t need another exposed outlet.

    Also, why use the granite to make a giant back splash rather than wrapping the counter around the kitchen. The wrapping cabinets create a 4.5 foot high space at the end of the galley that is absolutely useless. More cabinets underneath and a bit more counter space would have really improved that dead space.

    It might require move the stove closer to the fridge to access the space but it doesn’t look like a lot of thought went into the remodel. The condo is too small to waste space and the remodel couldn’t be too big for these details to slip.

    1. lowrydr310

      Is it just me, or is PERGRANITEEL starting to look tacky? It’s being used to dress up every shoebox kitchen, and I think it’s overdone. What’s the next big trend? I’m personally a big fan of Corian; I think it’s much more elegant than granite if done right.

      PS – I lived not too far away from here on Lemon Grove. These units aren’t brand new, but they’re not too bad for a young family or a young couple.

      1. AZDavidPhx

        It has always looked ridiculous when they ride the granite up the walls like some kind of stone wallpaper.

        The sheeple have been groomed by the Property Virgin housing garbage programs to want pergraniteel so that they can be cool just like those folks on the television.

  4. Robert

    IR (et al) let me play devil’s advocate: Everyone says for the gov’t to just leave real estate market alone and let the chips fall where they may BUT couldn’t we risk another bank implosion that would take down our entire economy like before?

    So with that in mind, isn’t the gov’t doing what it has to? the lessor or two evils with squatters getting a free ride in the process?

    1. DarthFerret


      In order to believe that the govt’s efforts are helping, one would have to rest on a few very large and questionable assumptions:

      1) the gov’t can keep doing what they are doing indefinitely

      2) what the gov’t is doing will prevent prices from returning back to historical norms

      3) preventing prices from returning to historical norms is a good thing

      I disagree with all 3 of those assumptions. The gov’t is spending TRILLIONS of dollars (we don’t waste time with mere Billions anymore) to spread the pain over a longer time period. In the end, prices will return to historical norms. People that can’t afford their mortgage will be foreclosed on. The end result will be the same, but with less panic. I’m not convinced that we’re getting our money’s worth.

      In a worst-case scenario, suppose that assumption #1 fails sooner rather than later and the gov’t piggy-bank truly runs dry. Then we still have the price free-fall and bank run that the scaremongers were predicting, but now the taxpayers are also several Trillion dollars deeper in debt. Imagine a scenario where banks are going under and the FDIC no longer has the funds to cover the deposits. Scary, no? If we keep spending the way we are now, it could happen.


  5. DarthFerret

    Wow, talk about over-upgrading! A crappy, tiny, 2/1 condo in Orangetree outfitted in full pergraniteel? No, correction, it’s WORSE than pergraniteel! They’ve got granite counters and steel appliances, but rather than Pergo wood floors, they’ve got expensive tile in the living room. Harder to clean and pricey to boot. WTF?! Well, at least we can know that some of her HELOC went back into the house. That leaves her with barely $100,000 for annual vacations to Europe and the lease on her BMW SUV. Such a pity that that poor dear had to suffer so.


    1. IrvineRenter

      Actually, I suspect the pergraniteel was put in by the flipper. The former owner probably just spent the $100K.

      1. DarthFerret

        Ahh, got it. Just saw your more recent purchase date of 6/3/10, which doesn’t show up on Redfin.

        Wow, that’s almost worse than the original owner doing it. That means that a person that is supposedly a professional believes that their pergraniteel investment will pay off in the sale price. I’ve got this one flagged in my Redfin favorites. I’ll keep an eye out to see what it eventually sells for. I’m interested to see if this flipper makes their money back.


    2. Chris

      What’s up with all these Bimmer critiques anyway? It’s only a few k’s more than your avg JP cars which would wrinkle your body when you get into a major accident (more k’s when you move up the chain).

      Ferrari, Aston, Lambo, McLaren….now THOSE would be something worth criticizing.

  6. DarthFerret

    Reuters has a great article today on mortgage flipping scams:
    Special report: Flipping, flopping and booming mortgage fraud
    The house on the 53rd block of South Wood Street in Chicago’s Back of the Yards doesn’t look like a $355,000 home. There is no front door and most of the windows are boarded up.
    Public records show it sold in foreclosure for $25,500 in January 2009, then resold for $355,000 in October. In between, a $110,000 mortgage was taken out on the home, supposedly for renovations. This June, the property went back into foreclosure.
    To Emilio Carrasquillo, head of the local office of non-profit lender Neighborhood Housing Services of Chicago (NHS), the numbers don’t add up. He believes this is a case of mortgage fraud.

    Carrasquillo has identified a number of properties in Back of the Yards that sold for between $5,000 and $30,000 last year and then came back on the market for up to $385,000. He said property prices are being artificially inflated, allowing fraudsters to walk away with vast profits and making it harder for honest local people to buy a home.
    Mortgage fraud takes many forms, but a well-organized scam frequently involves a limited liability company (LLC) or a “straw buyer.” In this scheme, fraudsters use a fake identity or that of someone else who allows them to use their credit status in return for a fee. The seller pockets the money the buyer borrows from a lender to pay for the home. The buyer never makes a mortgage payment and the property goes into foreclosure.
    In other words, the money simply disappears, leaving the lender with a large loss. Since the U.S. government is now backing much of the mortgage market in the absence of private investors, that means “taxpayers are ultimately on the hook for fraud,” said Ann Fulmer, vice president of business relations at fraud-prevention company Interthinx.


  7. Will

    Irvine Renter – I got a kick of the news stories about women stepping out on their own to buy condos at the top of the market. This was supposedly a sign of the “empowerment” of women…they did not need a man’s help to borrow more money than they could ever pay back to purchase an overpriced shoe-box in Irvine. “I am woman, hear me borrow.” Just like the Virginia Slim’s advertisements that portrayed smoking as a sign of a woman’s independence and liberation!

    1. AZDavidPhx

      Indeed! I am all for the empowerment of the gals. Equal opportunity foreclosure for all. I dated a few of them when I moved to PHX in ’05. They were so proud of themselves for being adults and leveraging the hell out of themselves with mortgages to show how successful they were. I cringe when I think about of underwater they must be right now. I wonder how a Destiny’s Child song sounds in a house with -100K equity. They can now show the world they don’t need men to file bankruptcy either.

  8. HydroCabron

    It has been said here before, at least in so many words: al Qaeda has not inflicted anywhere near the magnitude of damage on this country that bankers, politicians, and HELOC abusers have managed.

    We drop bombs on people – not usually the same ones who committed the crimes – for less than what has been inflicted on us through this silly bubble. There will be little jail time for any of the criminals, but the cost of misallocated resources will remain with us for generations.

  9. Pwned

    In addition to responsible renters paying the bill for these handouts, I wonder how many squatters still deduct mortgage interest from their taxes. Either way, homedebtors get a huge tax break that renters can’t enjoy.

  10. Chris

    $2k/mo cash outlay? I can rent a better 2bd/2bth place in Irvine for around $1.5k/mo.

    Another $100k downward pricing is needed for this dump.


    1. Butts Wagner

      Exactly. Places like this are overpriced by 50% or more under current conditions based on what I’ve read elsewhere.

  11. Chris

    Say what you want about Bush Jr. but my net worth went up threefold with him in office. I was pretty damn successful with Clinton as well but I started out with nada under Bush Sr.

    The game has changed and we all need to change with it. I see continuing lower rates ahead and the best way to make money out of today’s environment is to buy long term CDs (or bonds that you KNOW you’ll get your money back when mature).

    There’s another way but it’s too risky for avg folks here so I won’t mention it.

    BTW, the only way we can get these stupid stimuli to stop is to deadlock Congress. Otherwise, expect the same shit day in and day out.

    1. Scott

      “There’s another way but it’s too risky for avg folks here so I won’t mention it.”

      Would like to hear it, can u give us a lesson ?

      1. Chris

        Let’s just say that it has to do with options (and no, not the stock options that you get when you work for a company).

        With the current govt vs reality push and pull, this is currently the best play with the risk.

        However, like I said, too risky but has its reward.

        1. Time Value

          I’d be interested in some detail. Long or short straddles or combos? Ratio spreads? Are we talking equity options, equity index options, options on bond futures?

          1. Chris

            I wouldn’t do straddles with this New Normal (see my above comment on govt vs reality push and pull). With push and pull, you’re gonna get flatline pricing on everything (primarily stock prices). Reality (i.e. shit) hits the fan, everything will go down. Bernokio and company will make it go back up somehow (noticed how shorts and put buyers are getting killed right after March ’09).

            With straddle, time factor will kill you.

            And I’m talking about all the options that you’ve mentioned above.

            My last hint and I’m out of this thread….think of this New Normal (push vs pull). What can you do with options that will make money with the **least** amount of risk (of course there’s gonna be risk….but who says you can’t minimize it?)

            The risk is still there….try to minimize it.

  12. A.W. Chuck

    Eh…what else is new? I’m so used to the government raping me to bail out somebody, anybody, that I don’t ever expect anything different anymore.

    When I hear a new government program is coming out, I just assume it’s more money from me to give to someone else. And why?

    I’m still employed.
    I have no debt.
    I rent.
    I have a comfortable income.

    I’m the cash cow Obama can just keep coming back to like a damn cash register.

    I’m the hamster on the treadmill pooping out cash for the government unions, the home-debtors, the unemployed, the not-really-but-pretending-to-be-poor and the banks.

    Did I miss anyone I’m paying for? I’m sure I did, I’ve lost count…

  13. Baron

    Gross Income requirements for $1990 a month is $82344. Debt to income specifcations for fha is 29%, total debt is 41% but the house must still be under 29%.

  14. John Bailo

    There really only one way to normalize the situation, so that fair value is restored to housing.

    Property taxes must rise precipitously, and at progressive rates. Prop 13 style laws should be rescinded.

    This would fund the Government, and make idlers pay their fair share.

Comments are closed.