In the years immediately following the financial crisis, no small amount of space on WSO was dedicated to the debate over what should be done about those Regular Joes who were caught in the crossfire of the mortgage mess and were losing their homes right and left. The subject of strategic foreclosure came up repeatedly, and in my opinion was one of the more interesting debates in the history of the site. For better or worse, a lot of folks in the general public got a government bailout, which seemed fair at the time at least on a prima facie basis because of all the handouts the banks were getting.
So now that we've put a few years distance between then and now, how did all that charity work out?
About like most of us expected, frankly. In a study released earlier this week, it was revealed that 30% of those homeowners who received a bailout have already defaulted again. What's worse is that the remaining 70% are about to go through a mortgage reset, which will no doubt shake a few more out of the deadbeat tree.
“The program was a temporary Band-Aid,” said Greg McBride, a senior financial analyst at Bankrate.com. “Five years later, that Band-Aid is going to be ripped off.”