Gov't Losses Big in Home Market ( Read "Gov't" as Tax Payer)

Yes siree, Tax payers are now home owners. In fact we now own 50,000+ homes across the country. And in most cases the mortgage on those homes is greater than the homes can be sold for on today's market so you are losing money big time on the "investment" the government made for you with the giant Bail Out Plan (TARP). And every day these houses sit empty they are not only losing value but they are eating away at more dollars keeping them up so they can eventually be sold.

The exact scale of the government's increased homeownership isn't clear, in part because Washington hasn't precisely tracked the number of homes it has for sale at any given moment. But the change is substantial: The number of homes HUD owns, for example, is up about 40% since 2004. The number owned by the U.S. Department of Agriculture has more than doubled over the past two years, to just over 1,000.

Both HUD and the VA are trying to speed up sales to cut the number of homes they own. But with prices falling, every sale also means deeper losses. HUD lost 39 cents on the dollar for every home it resold last year, and the VA lost 13 cents. This year's recovery rates are even worse. And the figures don't include the millions of dollars in management fees the government has paid to maintain and sell those homes. Gov't losses big in home market - USATODAY.com

The government bought these mortgages from the banks to keep them from going under because they bought these mortgages in bundles called derivatives that really had no real estate or tangible goods backing the mortgages (loans). These derivatives were what caused the problems as financial institutions kept buying them and then reselling them at a profit, then adding more profit and selling them again. Everyone down the line made big money. The ones who got in trouble were the last ones to hold the derivative and hadn't had time to sell them yet. These were the "toxic" mortgages you heard so much about. It was all a sort of musical chairs thingee.

So when people couldn't pay their mortgages the banks were caught holding either a empty house or an empty piece of paper (derivatives). The government bought both the houses and the pieces of paper. Remember how that Paulson guy told you you would eventually get your money back after the homes were sold? Hain't gonna happen folks, so sorry. Of course Paulson (Sec. of Treasury under Bush and the man who developed the TARP Bail Out Plan of 2008) and his Wall Street buddies and the mortgage bankers and other financial institutions all over the country got theirs, but you the tax payer are stuck with the "toxic" part of the deal.

The government bought all these guys their "chair" and left you the tax payer standing holding the empty houses that are worth far less than you paid for them thru your government of course. I don't think any of us poor slob tax payers would be dumb enough to buy empty pieces of paper, but those guys in Washington did in our name because we elected them to look out for our interests.

And there is more to come as President Obama rolls out his Mortgage Foreclosure Plan (see: Obama expands mortgage foreclosure help ) our government in our name will buy more of the houses from banks across the nation. There were approximately 1.2 million foreclosures just in 2007 and 2008. As the employment rates climb there are more and more people losing their homes and the federal government keeps buying them to keep the financial institution that made the loans in the first place solvent so they can continue to lend money to keep the economy going. So now you have jumped from Musical chairs to a Merry-Go-Round, but again the tax payer is not a player because he is standing in the sawdust holding the ticket stubs.

click to share: http://brendabowers.wordpress.com