August 26, 2009

Subprime lenders getting foreclosure funds

Most of the mortgage lenders receiving taxpayer subsidies through a U.S. program to prevent foreclosures specialized in risky subprime loans, advocates say.

The Center for Public Integrity, a non-profit investigative reporting group, says in a report to be released Wednesday 21 of top 25 participants in the $75 billion Making Home Affordable program engaged in just the type of lending that triggered the mortgage foreclosure crisis, The Washington Post reported.

Bill Buzenberg, executive director of the center, said in a statement much of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place, such as J.P. Morgan Chase, Wells Fargo and Countrywide -- since purchased by Bank of America -- which are all eligible to receive billions of dollars under the program.

But Scott Talbott, chief lobbyist for the Financial Services Roundtable, told the Post the center's report oversimplifies the causes of the housing crisis and glosses over the complexity of the markets.

Even as unemployment triggers more foreclosures, the industry continues to work with homeowners to provide solutions, Talbott said.