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Subprime Screwups Reap Subsidies

By Jane Yager, Newser Staff

Posted Aug 26, 2009 5:03 AM CDT

(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.

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The Countrywide Banking and Home Loans office in Glendale, Calif. (AP Photo/Damian Dovarganes, file)

A realtor's sign stands on the lawn of a foreclosed home in Egg Harbor Township, NJ. (AP Photo/Mel Evans, file)

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This money is going directly to the same financial institutions that helped create the subprime mortgage mess in the first place. - Bill Buzenberg, Executive Director, Center for Public Integrity

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