February 28, 2008 / 6:19 PM / 11 years ago

UPDATE 1-Proposed U.S. mortgage aid would do harm - Paulson

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WASHINGTON, Feb 28 (Reuters) - Plans for sweeping federal programs that would aid troubled mortgage borrowers would bring unfair relief to speculators and reward investors who made bad bets, Treasury Secretary Henry Paulson said on Thursday.

“So while some in Washington are proposing big interventions, most of the proposals I’ve seen would do more harm than good,” he said in a prepared statement.

Several leading Democratic lawmakers in Washington have proposed multi-billion dollar programs that would help troubled borrowers stay in their homes.

Paulson also had strong words of discouragement for homeowners who may be mulling whether to simply walk away from a home that has slipped in value.

“Being ‘underwater’ when you can afford your mortgage does not affect your ability to pay your mortgage,” Paulson said. “Homeowners who can afford their mortgage should honor their obligations.”

Reporting by Patrick Rucker; Editing by Chizu Nomiyama

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