Senate lawmakers have decided to press on with their unethical and irresponsible mortgage bailout bill despite a veto threat from the White House.
Senate lawmakers have decided to press on with their unethical and irresponsible mortgage bailout bill despite a veto threat from the White House.
View Housing Market Watch RSS feedU.S. Senate lawmakers have decided to press on with their unethical and irresponsible mortgage bailout bill despite a veto threat from the White House.
BY PAT SUMMERS
Lawmakers are desperately trying to put a billion dollar mortgage rescue plan in front of President George Bush before they leave for their Fourth of July vacation at the end of next week, but the White House is not cooperating.
Backers of the housing legislation claim that it would boost our sagging economy and save as many as 300,000 distressed homeowners from foreclosure. Those who oppose it say it will prolong necessary corrections in the housing market, subsidize irresponsible borrowers and bail out the lenders who caused most of the problems.
Bush's senior advisers recommend that he veto the bill because it includes a provision that provides nearly $4 billion in grants to local communities for the purchase of foreclosed and dilapidated properties. This money would be a boon to mortgage lenders, who want nothing more than to get rid of the all of their dead weight loans.
The White House is also concerned about the regulation the Federal Housing Administration would (or more appropriately, would not) receive throughout the bailout. The statement White House officials released suggests premiums would inevitably be raised for all FHA borrowers if the legislation goes through without the necessary FHA reforms.
While these concerns may be valid, there are many other things wrong with this bill. To start, it would bail out and reward the bad behavior of both borrowers and lenders. The measure would allow the FHA to provide $300 billion in new, cheaper mortgages to struggling and financially risky borrowers who can't get a fixed rate loan anywhere else.
Lenders benefit because they get to avoid a costly foreclosure process while they recoup a portion at least of what they are owed. They also get to transfer risk to taxpayers who are ultimately responsible for FHA guaranteed loans.
If this weren't enough, the bill also includes $14.5 billion worth of housing tax breaks, including an $8,000 credit for first-time homebuyers buying in the next year. While this might seem nice for someone who is buying a home for the first time, it is grossly unfair to current homeowners, as well as renters who get no tax breaks at all.
There has been an obvious bias in the tax law for years--the government has consistently rewarded people who choose to buy a home over those who choose to rent--but this legislation takes the bias to a whole new level.
Lawmakers could vote on the bill as early as next week. Chances are it will pass. If that happens, only Bush's veto will stop it. Let's hope he remains firm.
An open letter to all of the lawmakers and taxpayers who think a mortgage bailout is what we need to solve the housing crisis.
To get borrowers to leave a house--and leave it in good condition--mortgage lenders around the nation have begun offering cash for keys. Some lenders are paying out upwards of $3,000.
Democrats unveiled a new plan last week that will allow the FHA to buy $300 billion in delinquent, underwater mortgages. The initial cost to taxpayers is estimated to be $20 billion.
The worst housing slump since the Great Depression is prompting all manner of new bailout plans. Fed Chairman Ben Bernanke encourages banks to forgive portions of mortgage debt, the Democrats propose using billions in federal dollars on buying up bad loans, and the Bush Administration is prepared to dump bank losses on the taxpayers' shoulders.
Should mortgage borrowers at risk of losing their home be given a bailout? What about lenders who face lost profits? Four recent polls ask Americans where they stand on these issues.
Many people may be losing their homes to foreclosure because of legitimate financial crises, but there are even more people losing their homes because of lender follies as well as their own greed and stupidity. Here are five stories in particular that will be sure to induce fits of eye-rolling.
If you have followed the news at all over the last few months, then you know that the public has been spoon fed a spate of tearjerker news stories that are meant to paint struggling mortgage borrowers as victims. These stories talk about the importance of staving off foreclosures and helping people who need it, but they very rarely touch on the truth of the matter: most mortgage borrowers were reckless and do not deserved to be rescued.
Are you familiar with home loan terminology like adjustable rate, credit score and interest-only? Knowing this home loan jargon can help you become a savvy home buyer and allow you to better understand a realtor or lender. Read this article for explanations of these home loan terms.
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