The Obama administration is trying to help people who cannot afford to pay their mortgage payment to stay in their home. Great!

From The Huffington Post

Under the $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years.

The government support, which is provided from the $700 billion financial bailout program, is aimed at providing cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.

So in other words, the federal government will reward mortgage providers that provided home loans to people that could not afford those loans. Why even make prospective borrowers fill out all that paper work?

Also from the same article:

Rising foreclosures depress home prices and threaten the sustainability of the fledgling economic recovery.

The problem is, home prices are still too high. Until we return to a time when a family making the national median average in wages can afford the national median average priced home, people will continue to over-borrow to buy a home. Prices for homes have skyrocketed while wages have remained nearly stagnant. Compounding the problem is that productivity has increased, resulting in less need for employees. A less need for employees not only keeps unemployment rates high, it helps keep wages stagnant.

I think it’s great that the federal government wants to help people. I just don’t think helping people stay in homes they cannot afford is really helping them. Rewarding borrowers $1,000 a year for three years for loaning money to people they should not have loaned money to is rewarding wrong doing. And it’s not like the federal government has more money than it knows what to do with. How many of these people who now cannot afford their mortgage payments refinanced during the housing bubble into loans with adjustable rates based on home values that existed only on paper?

What’s next, will the Obama administration go to Vegas and help people that lost all their money at the crap tables?