Is Uncle Sam’s Involvement Bad for Homeowners?

As the race for president reaches its final stretch, Democratic Nominee Sen. Hillary Rodham Clinton (D-NY) has issued a press release saying she supports a second stimulus package that would pledge $30 billion in funding to help communities restore foreclosed properties, while also assisting additional homeowners with loss mitigation measures, according to a press release posted on the Senator’s campaign Web site.

Sen. Clinton also proposes an additional $10 million in funding to help state agencies refinance homeowners into safer loans.

On her Web site, Clinton said, “And by investing new, temporary resources in a housing-focused stimulus package, we can avoid the worst fall-out from the current econodownturn, keep families in their homes and stabilize communities.”

Clinton’s plan comes at a time when the government is facing additional scrutiny for utilizing taxpayer money to bail out homeowners and investors who are finding themselves at the epicenter of the recent foreclosure surge.

FreedomWorks Foundation, a policy institute center that pushes for free markets and less government, announced this week that it’s hosting a policy luncheon featuring the agency’s chief economist, as well as Dr. Todd Sinai of The Wharton School at the University of Pennsylvania. The focus of the discussion will be how much government involvement is too much.

The luncheon titled, “The Mortgage Crisis: Understanding the Impacts of Subprime Relief Programs,” aims to decide whether excessive political involvement in the financial downturn awards irresponsible behavior at the expense of consumers who acted wisely, according to FreedomWorks.

“FreedomWorks Foundation believes that the market needs to be allowed to reprice mortgage loans and property values, and the government should not exacerbate the situation with policies that create moral hazard, distort prices, and push costs onto taxpayers. Our luncheon will examine the trade-offs inherent in these different policy approaches,” the agency said this week.