Compassionate. Firm. Worried. Proactive. Gov. Martin O?Malley looked all these roles ? and even, unsurprisingly, sent photos to prove it ? in meeting with mortgage lenders Tuesday. But this is a case where not doing anything is the best solution to “protect middle class homeowners from losing their homes” to foreclosure.
This may sound cold-hearted. But those who make bad financial decisions should not be bailed out at the expense of taxpayers who bought homes they could afford. Those “Bridge to Hope” loans the governor wants to make available to troubled homeowners are not free. They also send a message that imprudent behavior will be rewarded by the state.
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Besides, who is to say those homeowners would rather not walk away from their homes? Many people will be unable to sell their homes for more than they paid for them for years to come and may prefer to take a hit on their credit score than to chain themselves to paying a mortgage.
And more regulation of the mortgage industry, as O?Malley has proposed, makes no sense when the agency charged with overseeing those firms was recently found negligent in performing its basic duties by the Department of Legislative Services. Even if the Department of Labor, Licensing and Regulation could perform its duties, more regulation would solve nothing. Banks have no options now but to lend to people with better credit histories and to require bigger down payments because no market exists for risky loans on the secondary market.
If O?Malley really wants to do something, why not: 1. Cancel property taxes for those troubled homeowners the government identifies for one year and reduce spending by the same amount. That would not only aid the audience he wants to target but would also show he cares about solutions, not just options that hurt lenders and taxpayers. And, 2. Demand criminal prosecution of anyone who committed fraud in pushing or taking these loans. Individuals got us into this mess; let them suffer the consequences.
The best general option would be for legislators to repeal the $1.4 billion in new taxes passed during the special session, however. That would make it possible for many more people to make their house payments, not just those select few the governor wants to make beholden to his largesse.
