Borrowers are to blame for their subprime woes and lenders and Wall Street investors, not borrowers, would most likely benefit from any federal mortgage relief. Most taxpayers stand to foot the bill for new laws designed to address the subprime mortgage morass.

Two recent surveys reveal consumers are split over legislation, including the "rate-freeze" bill that U.S. Treasury Secretary Henry Paulson supports as not a bailout for people who made bad decisions.

"Foreclosures are very costly to lenders and investors as well as harmful to homeowners," Paulson said in an interview on Fox News television Dec. 18. "There's no bailout with government money, none whatsoever."

However, virtually all new laws come with some administrative costs and some subprime proposals making the rounds on Capital Hill directly pick the pockets of taxpayers.

An Opinion Research Corp. poll conducted for CNN found that 51 percent said subprime borrowers whose homes are at risk willingly accepted risky home loans and are themselves to blame. Another 46 percent said borrowers are the victims of bad lending policies.

Even though most believe borrowers are at fault, 51 percent said people who could lose their homes because of the risky loans deserve special treatment. Another 46 percent said there should be no special treatment for those in trouble.

In another poll conducted by Harris Interactive for the National Taxpayers Union almost half of adults polled, 48 percent, said a federal bailout would help either lenders or Wall Street operations that profited from the mortgages. Only 26 percent believe subprime homeowners would benefit most.

"Americans are skeptical not only of who will benefit, but who will be left holding the bag," said NTU Vice President for Policy & Communications Pete Sepp.

That's not surprising. For years, homeowners were sold subprime mortgages as the answer for many who otherwise couldn't afford a home. Now many feel like they were sold a bill of goods.

In the CNN poll only 26 percent said banks and other financial institutions that currently hold bad home loans should receive special treatment that would prevent them from losing money on those mortgages, while 72 percent said they would oppose any such special treatment.

When the NTU poll asked its group which statement most closely reflects their views on plans allowing federal agencies to "increase the size of the loans they can insure and purchase, and to reduce down-payment requirements," 66 percent agreed with the statement "these proposals are nothing more than a taxpayer-funded bailout of banks and lenders that provided and profited from these risky loans."

Thirty-four percent agreed with the statement "a taxpayer-backed refinance program is necessary to avoid an increase in foreclosures that could reduce home values across the country."

Also in the NTU poll, taxpayers would be most negatively affected if the government were to "bail out the subprime mortgage market," according to 60 percent of those polled. Only 5 percent said in each case that "homeowners who hold subprime mortgages," "lenders who issue subprime mortgages," or "Wall Street banks who profit from subprime mortgages" would be most negatively affected.

Forty-five percent of those polled said they strongly opposed or somewhat opposed proposals for taxpayer funding "to subsidize mortgage payments, or subsidize the cost of refinancing subprime loans." Only 29 percent said they strongly or somewhat supported it, and 12 percent indicated they didn't know or were not sure.

"The low levels of trust in government reported in other polls, along with the results of our poll, seem to suggest that policymakers may want to minimize the government's role in any rescue packages being crafted with the lending industry," Sepp concluded.

Published: December 27, 2007

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.