It’s troubling to think Obama’s plan rewards bad choices made by lenders and borrowers.But when the disaster they created begins to harm people who had no part in the excess, the government has to act.

For months we’ve listened to complaints that the bailout was rewarding banks and businesses for poor decisions while doing nothing for Joe Six-Pack.

Well, President Obama’s mortgage relief plan this week changed that by making sure Joe was rewarded for his poor decisions, too.

That’s hard on anyone who finds themselves, through no fault of their own, victimized by the housing crisis. It’s hard for those who acted responsibly to watch irresponsible behavior rewarded.

And despite assurances to the contrary, there appears to be nothing in the $75 billion plan to stop people who acquired their loans fraudulently from being rescued.

Painful as it may be to those who didn’t reach beyond their means to buy their house, there is a good chance the plan will protect their assets as well.

Whether the borrower’s at fault or not, foreclosures bring down neighborhood property values.

Forced sales threaten to absorb demand, reducing the prices of houses that come to market later, according to researchers. Furthermore, people stuck in bad mortgages have no money to pump into the economy. And as long as banks are saddled with bad loans, the credit market remain frozen.

But the plan is flawed.

The cushion offered to lenders and borrowers under this plan, for example, lasts only five years. Borrowers who take refuge under this umbrella may find, if their mortgage remains larger than the value of their house, that they get soaked worse in the long run.

Real-estate consultant Ramsey Su, in a Wall Street Journal column this week, argues that in such situations borrowers can rebuild their financial lives faster by going through foreclosure.

“Credit may be damaged, but homeowners can rebuild it,” writes Su. “And by renting something they can afford, instead of the McMansion they cannot, homeowners are most likely to have some money left over each month that they can save toward a down payment on a house they can eventually afford.”

This approach isn’t for anyone who would be homeless if they lost their house. But for those who can rent, it might be a little pain now that avoids a larger pain later.

It’s troubling to think Obama’s plan rewards bad choices made by lenders and borrowers.

But when the disaster they created begins to harm people who had no part in the excess, the government has to act.

The key now is to be sure the plan set in action Thursday is carefully tracked and amended where abuses or failings become clear.

The Patriot Ledger