Bush Plans Loan Relief on Housing

[Moseley]

He will call for the Federal Housing Administration to raise the ceilings on what it can charge for federal mortgage insurance, a move that would let an additional 80k homeowners with spotty credit records sign up, beyond the 160k likely to use it this year and next.

Will endorse proposals backed by Democrats that would raise the ceiling on the amount of a mortgage that can be refinanced with federal insurance.

Will support legislation that would provide tax breaks to homeowners whose mortgage debt is forgiven, in whor or in part, by lenders. The federal govt. currently collects taxes on the amount of a loan that is forgiven.

There are 2 million mortgages, all held by homeowners with credit problems and homes that are declining in value, are valued at 500-600 billion.

The total value of American mortgages is about 10 trillion. So 500 billion is 1/2 of 1%.

Now, is the government concerned about the .5% of the mortages held by homeowners that made a big mistake, or the huge mortgage industries that hold the mortgages and the resulting economic strife in afflicted areas?

Isn't the subprime market owned by a small number of corporations? Won't they be hurt more than anyone else?

The homeowner can simply fail to make the payment for 3 months, before being evicted, save the payment for the down payment on renting an apt/house.

Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers?

[Nielsio]

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Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers?

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[adios]

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.... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers?

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They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot.

[Moseley]

[ QUOTE ]
[ QUOTE ]
.... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers?

[/ QUOTE ]

They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot.

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Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks?

Would things be better, if capitalism was void of government involvement?

[Borodog]

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The total value of American mortgages is about 10 trillion. So 500 billion is 1/2 of 10%.

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[Kaj]

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The total value of American mortgages is about 10 trillion. So 500 billion is 1/2 of 1%.

Now, is the government concerned about the .5% of the mortages held by homeowners ...

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Like Boro said, you're an order of magnitude off in your math.

And beyond that, the dollar percentage is not equivalent to the percentage of mortgages held. These mortgages are probably less expensive than the mean mortgage, so their 5% dollar value of the total is shared by more mortgages. So maybe 6-8% of the total? That's a lot more than 0.5%.

So is the govt really concerned about 6-8% of the people and their financial problems? I don't know, and don't know if it should be. But it's certainly concerned about the financial health of the top 6-8% of this country.

[kidpokeher]

I'm worried there won't be a downward spiral in home prices.

[Kaj]

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I'm worried there won't be a downward spiral in home prices.

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Do you think I should have to pay to protect your housing investment?

(By the way, I'm a homeowner, too, and well, that's the breaks, I guess.)

[tomdemaine]

I'm renting so I'm hoping for the whole system to come crashing down [img]/images/graemlins/smile.gif[/img] Governments have been artificially propping up the price of houses since god knows when (tax breaks on mortgages etc) It's time for a market correction.

[boracay]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
.... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers?

[/ QUOTE ]

They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot.

[/ QUOTE ]

Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks?

Would things be better, if capitalism was void of government involvement?

[/ QUOTE ]

"High taxes on the rich are a failed strategy because the really rich people figure out how to dodge taxes anyway." - G.W. Bush, August 10, 2004

"The best way to relieve families from time, is to let them keep some of their own money." - G.W. Bush - 9-13-2000 regarding Taxation