Are we being honest about the Homeowner Stability Initiative?

MSNBC: The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly,” Obama said. “It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.”


He said the plan will not help those dishonest lenders who distorted facts for naive buyers, or buyers who signed on for loans they knew they could not afford.



But...


There are incentives for lenders to modify loans for borrowers who can't afford their loan and the government to make up "part of" the difference between the old monthly payment and the new payment.  I don't see how one can argue that this doesn't in some way either benefit "dishonest" lenders or stupid buyers who could not afford their loan.  I don't actually believe in the dishonest lender so I'd categorize everyone facing foreclosure as a poor buyer that should have known they could not afforded their loan or at least taken responsibility for the risk of that loan.


In the end, the incentive is perfect for the lenders who will be getting above market rates on the loans that they made to buyers rather than face the losses they would have sustained from foreclosure.  The risk of foreclosure was the very thing that should have kept these lenders scared of making the loan in the first place but now the government had reduced their risk so everyone who acted foolishly truly does win.