October 25, 2011, Fairfax, VA—Americans for Limited Government President Bill Wilson today issued the following statement condemning an Obama Administration proposal to allow underwater borrowers of government-backed mortgages to refinance:
"By some estimates, a massive refinancing program for underwater borrowers of government-backed mortgages could cost as much as $85 billion a year. That would mean $85 billion less is collected in interest payments, resulting in those losses being imposed on Fannie and Freddie — on an annual basis. And since taxpayers are backing the GSEs, that will mean $85 billion added to the national debt every year. Assuming an average maturity of 15 years, that means the total cost of Obama's new program could be more than $1.27 trillion.
"Moreover, this will do nothing about the more-than $700 billion of negative equity that is out there. Those who qualify will still owe more on their homes than they are worth. They will just have a slightly lower interest rate. It's a bribe. The Obama Administration is attempting to shore up its wilting reelection prospects by throwing money at favored constituencies. It's nothing more than a $1.27 trillion slush fund to reelect Obama."