Wednesday, July 29, 2009

Treasury Still Working Hard to Destroy Incentives

Treasury has been working hard this week to expand the number of households that would have no incentive to earn income, urging lenders to modify 500,000 mortgages according to its HASP plan.

HASP is the Obama Administrations plan to reduce mortgage payments for people earning less money, and insisting that people making enough to pay their mortgage keep paying in full.


DWAnderson said...

You would think that given the incipient housing recovery much of the rationale for government sponsored mortgage modifications should disappear-- but government inertia is not to be underestimated!

fl said...

I am a little unclear about the rules for HASP. Does the income test apply even after the mortgage has been modified? In other words: if the individuals starts earning higher incomes after she had her mortgage modified, then will her payments be adjusted to reflect this change in her income? This seems to me to be very important for understanding how long the work-incentives will be distorted.
Can anybody answer this question for me?