The Senate’s bogus new proposal to “help” homeowners facing foreclosure has drawn heavy criticism from just about everyone who isn’t a politician, and even some who are. The “Foreclosure Prevention Act” does little to help people keep their homes; rather, it benefits banks and homebuilders who buy foreclosures away from homeowners.

This may make it a little easier for homeowners to sell, but it doesn’t help those who are simply trying to save their homes. In fact, providing tax credits and other incentives for banks to buy foreclosed properties actually encourages mortgage companies to keep foreclosures on these properties instead of working with their clients to find solutions.

Although the bill has yet to pass both houses of Congress and the president has not signed it into law, it is very likely that some of these offensive provisions will make it into the final version of the law. The tax credits going to banks and builders will most likely stick around as they supposedly help homeowners get out of foreclosures, when in fact they just promote more foreclosures.

Banks and builders will be able to report property losses four years ago instead of two, as is the case now. Additionally, these parties will be able to get a $7,000 tax break when they purchase foreclosed properties. Since it’s usually the executing banks that buy homes at county sheriff’s sales, they may be able to take literally thousands of tax breaks just by foreclosing homeowners even faster.

Builders, on the other hand, will be able to continue building houses that no one can afford in areas that no one wants to live in. Providing subsidies to builders to continue building or repairing properties only puts more homes on the market for sale, further lowering home prices but allowing homebuilders to stay in business at the expense of other members. of the general public.

Not surprisingly, the $7,000 tax credit for the purchase of foreclosed properties lasts only for the next 12 months, at which point it will expire if not extended. The biggest buyers of foreclosed homes in the coming year will be the biggest lenders, who are experiencing the consequences of lending to people who can’t afford their mortgage payments.

Twelve months of foreclosures could potentially create hundreds of billions of dollars in tax credits for buyers, most of which will help banks offset losses on these loans. With banks now writing off their worthless mortgages by tens of billions of dollars, it will be a welcome relief to offset those losses with hundreds of tax breaks they receive by stealing homes from homeowners.

It should come as no surprise why the Foreclosure Prevention Act has received so much criticism. The market will find ways to help homeowners save their homes or leave them, but by giving more tax breaks to the banks and builders who benefited most from the housing bubble, just to make sure they don’t feel the same level of pain as homeowners. . , it will only lead to more unintended consequences.

Homeowners who know their banks are receiving hundreds of billions of dollars in direct subsidies and hundreds more in tax credits may be much less willing to give up their home peacefully. It is the repeated government interventions on the side of big business at the expense of the public that help foster the animosity that leads to properties being stripped of valuable copper pipes, appliances and other fixtures.

It can be very difficult to blame homeowners for taking psychological and physical revenge on banks that not only steal their homes, but also profit most from the foreclosure crisis. And all of this is being paid for by people across the country who are losing their homes in record numbers.