A former bank manager isn't surprised that California is
asking taxpayers to bail out homeowners with "underwater
California has given banks and homeowners up to $100,000 in
taxpayer funds to lower underwater mortgages. Fox News reports that
after banks refused to pay 50 percent, the state agreed to
use those funds to pay the full amount to reduce the
principal balance for homeowners. The Golden State has received $2
billion for Help for the Hardest Hit Housing Markets, a program
that aims to help those struggling to pay their
James Lambert, a
pro-family activist and real estate loan sales agent, further
explains the situation.
"One thing that we should all know is that unfortunately there
[are] over 1,000 banks currently, according to published reports,
that are undercapitalized -- meaning that they don't even fit the
criteria of capitalization that the FDIC calls for," he notes.
"Based on that and the fact that you have so many underwater
mortgages and so many mortgages that the banks are holding
--upwards to $5 million -- I'm not really surprised that the
government is doing this, especially under this regime."
Fox News reports that California agreed to give 100 percent of
the funds in the first year, and homeowners will not be required to
pay that back if their homes are sold at a profit. However, they
must make payments and live in those homes for five years.