From the Asbury Park Press:
No one wants to see people lose their homes. But the state is in no position to rescue residents who have made bad financial decisions. The state Housing and Mortgage Finance Agency should drop plans for a $30 million rescue program for homeowners facing possible foreclosure after being caught in the worldwide credit crunch.
The 30- and 40-year loans would go to otherwise credit-worthy homeowners who took out adjustable-rate mortgages and find they can’t afford to pay the loans that now carry much higher interest rates. The program was expected to help 150 to 200 homeowners. About 1,600 residents have inquired about the program. It would be financed as the borrowers repay their loans over time.
The agency was expected to vote on the program Thursday, but it was withdrawn from the agenda, officials said, so they could refine it. They should scrap it altogether instead.
New Jersey has multibillion-dollar debt problems of its own. And state intervention sends the wrong message to all those homeowners who work long hours or multiple jobs and make do with less to ensure they can meet their largest monthly obligation: their mortgage.
If the state wants to do something to help people prone to overextending themselves, it should do it through consumer education and by requiring that lenders thoroughly discuss the potential risks and consequences of subprime mortgage loans before any documents are signed. But it should not penalize those who have made responsible financial choices by using their taxes to bail out those who have not.