In his speech in Phoenix on Wednesday, President Obama emphasized that his plan would help those homeowners who had acted responsibly. “It will not rescue the unscrupulous or irresponsible,” Mr. Obama said. “And it will not reward folks who bought homes they knew from the beginning they would never be able to afford.”
But the lines aren’t quite that clear.
Certainly, some homeowners who took out a reasonable mortgage and later lost their job will be helped. But people who bought too much house — and banks that allowed people to do so, or even encouraged them to do so — will also benefit.
As distasteful as this may be, it’s the only way to make a serious dent in foreclosures and, in the process, to help the financial system. …
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