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GAO: $1.4B In Mortgages Went To Tax Cheats

From the Washington Times:

GAO: $1 billion in tax credits went to cheats

Stephen Dinan
Wednesday, June 27, 2012

Tax cheats were given $1.4 billion in government-backed mortgage loans under President Obama’s economic stimulus, and the government doled out at least an additional $27 million in tax credits to delinquents who took the first-time-homebuyer tax break, according to a government audit released Tuesday.

Yes, but tax cheats vote, too. In fact, they probably can be counted on to vote several times.

Under government rules, delinquent taxpayers are supposed to be ineligible for the mortgage insurance program unless they have reached a repayment agreement with the Internal Revenue Service. But the Federal Housing Administration didn’t have the right controls to weed out bad applications, said the Government Accountability Office, Congress‘ chief investigative arm.

That meant FHA insured $1.4 billion in mortgages for 6,327 borrowers who collectively owed $77.6 million in unpaid taxes, or an average of more than $12,000 each.

The auditors said that as a category, the tax cheats had foreclosure rates up to three times as high as other borrowers, which meant the delinquent taxpayers exposed the government to even greater risks.

Which is what caused the housing crisis in the first place. Meanwhile, Obama always accuses the Republicans of wanting to return to the failed policies of the past.

“In the name of ‘stimulus,’ the federal government gave mortgage insurance to thousands of people we knew were tax cheats and had a bad track record paying their debts,” said Sen. Tom Coburn, Oklahoma Republican, who joined a bipartisan group of other lawmakers to request the investigation. “The federal government needlessly put taxpayers on the line to help tax cheats buy homes. Congress needs to ensure that tax cheats are no longer allowed to take advantage of FHA programs.”

In addition to the mortgages, the auditors found that more than half of the tax-delinquent borrowers claimed the first-time-homebuyers’ credit, worth up to $8,000

The report was the GAO’s second study looking at tax cheats and the stimulus. In the first report, GAO said thousands of contracts and grants were paid out under the American Recovery and Reinvestment Act to those with unpaid tax bills

Under a White House policy, buyers who are delinquent on their federal taxes are not supposed to receive the mortgage assistance, unless they have worked out a repayment agreement with the IRS. But FHA rules don’t prod private lenders to ask for that information, and the FHA doesn’t have a system to work with the IRS to get that information.

Mr. Coburn joined Sens. Max Baucus, Montana Democrat; Carl Levin, Michigan Democrat; Chuck Grassley, Iowa Republican; and Orrin G. Hatch, Utah Republican, to request a review of the program…

And this investigation will probably go no where. Just like all of the other investigations of Obama’s stash.

This article was posted by Steve on Wednesday, June 27th, 2012. Comments are currently closed.

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