Hardest Hit Housing Market fund hits taxpayers hardest...

When President Obama created the Hardest Hit Housing Market fund, banks and lending institutions were supposed to match the principal write down on severely underwater home loans in exchange for the taxpayers chipping in. In California, that didn't happen. When banks and lending institutions balked at their share, California used federal taxpayer money to pay down a $100,000 for 9000 lucky homeowners and the banks got off free.

Via FOX News:

Contrary to what voters were led to believe, California took the unprecedented step this month to give banks and struggling homeowners up to $100,000 in taxpayer funds to reduce underwater mortgages.

Originally, banks and lenders were supposed to pay 50 percent of the cost of reducing the principal for those whose homes are worth less than their mortgage. But when the banks refused, California took the controversial step of paying the entire amount, up to $100,000.

"We thought, you know, 50-50 was much more attractive and we'd have much more traction with lenders, and it just didn't turn out to work as well as we would have liked," said Diane Richardson, legislative director of the California Housing Finance Agency.

The program, known as the Hardest Hit Housing Market fund, is part of a $7.6 billion federal effort to help underwater homeowners in 18 states. California received $2 billion. But when banks and lenders who service loans refused to write down even a small portion of the negative equity loans, California decided to use the taxpayer money to pay 100 percent of the mortgage reduction.

AP Puts Lipstick on Housing Market Pig

Here is an excerpt from the AP story. (accent is mine)

AP reported:

U.S. homebuilders battered by the worst summer for home sales in a decade are already looking ahead to spring, saying they feel somewhat more optimistic about the prospect for an uptick in sales.

The National Association of Home Builders said Tuesday its monthly index of builders' sentiment edged up in November to 16, the highest reading since June.

Here is a table of the Housing Market Index (HMI) for the last 25 years.

Via NewsBusters:

How anyone can look at that chart and feel in anyway optimistic the housing market has entered an upturn is beyond me.

Tom Blumer over at NewsBusters opined:

The AP's Veiga "somehow" forgot to tell readers that the NAHB's "highest since June" reading was really "the same as June." In historical context, saying something good about October's result is like getting excited when an 0-12 NFL team finally wins a game -- in overtime, because the refs blew a call that cost the other team the game.