Subprime Screwups Reap Subsidies

By Jane Yager,  Newser Staff
Posted Aug 26, 2009 5:03 AM CDT
The Countrywide Banking and Home Loans office in Glendale, Calif.   (AP Photo/Damian Dovarganes, file)
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(Newser) – Many of the lenders eligible for $75 billion in taxpayer subsidies from the government's foreclosure prevention program are the very same subprime lenders who fueled the mortgage crisis in the first place, the Washington Post reports. According to a report to be released tomorrow, JPMorgan, Countrywide, Wells Fargo, and other subprime lenders qualify to receive billions of dollars under the Making Homes Affordable program. Of the top 25 program participants, at least 21 specialized in subprime loans.

The report comes as the Obama administration, frustrated with lender resistance to White House pressure to help delinquent borrowers, is changing tack from sticks to billion-dollar carrots. Lenders have criticized the report, issued by the Center for Public Integrity, as simplifying the causes of the housing crisis and missing the complexity of markets.