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Wow! It’s Free Money! Really?

Tuesday, August 6, 2013

A new state program to prevent home foreclosures will launch Wednesday in Lane and 32 other Oregon counties. The Home Rescue Program will provide a year’s worth of mortgage payments, up to a total of $20,000, and up to $10,000 in back payments to bring mortgages current, according to Benjamin Pray, spokesman for Oregon Housing and Community Services, Oregon’s housing finance agency.

The program, which aims to provide assistance to about 2,500 homeowners across the state, will begin accepting applications online at noon Wednesday, Pray said. To qualify, applicants must be able to show that their income is at least 10 percent lower than it was in 2011 or 2012, and meet other eligibility requirements.

They do not have to be behind on their mortgage payments to qualify for the program, which is intended to give struggling home­owners some breathing space and allow them to stabilize their finances, he said. – The Eugene Register Guard

Lane Solutions Responds…

It sounds so good – help (to the tune of $20,000) for up to 2,500 Oregonians having trouble paying their mortgages. And it’s Free Money From the Government! What’s not to like?

Plenty. First, there’s the issue of “Moral Hazard.” Some call it “Perverse Incentives.” That means doing something that encourages people to engage in damaging behavior. In this case, taking on mortgages they can’t afford and not setting aside “rainy day” money. Rewarding people who do this simply encourages others to take the same risks.

Then there’s the issue of the “free money.” No, it’s not free – somebody has to pay it. And since the government’s overwhelming source of funds is taxes, that somebody, dear reader, is you.

If you’re like us you’re more than willing to help that neighbor who’s sick, whose house burned down or who fell off his roof. But you’re probably thinking what we’re thinking – “I didn’t buy a house I couldn’t afford or assume a mortgage I couldn’t pay and now I’m having money taken from me to give $20,000 to somebody who’s not even behind on his mortgage?”

Compassion is admirable. And each of us should show it. But we believe in showing it with our own money, not money taken from one person and given to another.

Just like there’s no such thing as a free lunch, there’s no such thing as free money – especially from the government.