Monday, July 07, 2008

Housing Bailout Again Under Consideration This Week

As the U.S. Senate returns from its week-long Independence Day recess, the housing bailout bill is again in focus. The House of Representatives has already passed their version of the bill.
The housing rescue is designed to help hundreds of thousands of homeowners buckling under subprime mortgage payments avoid foreclosure and get new, cheaper loans. This could be the last major compromise to be signed by Bush this year.

It has drawn broad support in the Senate, where test-votes show it has enough backing to override a veto. A procedural vote was expected Monday, and the measure is expected to pass the Senate as early as week's end.

First, though, lawmakers have to break a logjam over Republican Sen. John Ensign's bid to add $8 billion worth of renewable energy tax breaks. Then leaders have to resolve disputes among Democrats and with the White House about important details.

The measure includes a plan for the Federal Housing Administration to insure up to $300 billion in new, more affordable fixed-rate loans for borrowers otherwise considered too financially strapped to qualify. The proposal also would overhaul the FHA and tighten rules for government-sponsored mortgage companies Fannie Mae and Freddie Mac.

"I think we can get us a bill," Bush said recently. "But it's going to require less politics and more focus on keeping our minds on who we need to help, and that's the homeowner."

Democrats are divided on how high to place limits on the loans FHA can insure and those two companies can buy. The House proposed a roughly $730,000 cap and the Senate embraced a $625,000 ceiling.

Leaders are tussling with the White House over including at least $3.9 billion in grants for buying, fixing up and reselling foreclosed properties. This is an idea that Democrats say is critical to battling blight and Bush calls a government bailout for lenders who helped cause the housing crisis.
I ask that everyone email their senators again asking them to oppose the bailout.

5 comments:

  1. Ken Harney, of all people, made me painfully aware in his WashPost article over the weekend that the $8k "tax credit" trumpeted for first-time buyers actually has to be paid back to the IRS over the life of the mortgage. so it's really just an interest-free loan, not at all a tax credit.

    sneaky b*stards, those Bank of America lobbyists.

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  2. Housing Crunch-ManJuly 07, 2008 2:31 PM

    I think it will be interesting to see how this plan works. There's no doubt that something needs to be done.

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  3. Housing Crunch-Man said...
    "I think it will be interesting to see how this plan works. There's no doubt that something needs to be done."

    The time to do something about the problem was five or six years ago before the housing bubble got too far out of control. Now a price correction is badly needed to bring things back into balance.

    In the words of Lao Tzu:

    Difficult problems are best solved while they are easy.
    Great projects are best started while they are small.

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  4. Acccording to news, on JUne 10 this year, Obama Bailout turned a profit" of $1.8 billion in interest payments on the first set of bank loans that were repaid." That's a very good indication! :)

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  5. marvin said...
    "Acccording to news, on JUne 10 this year, Obama Bailout turned a profit' of $1.8 billion in interest payments on the first set of bank loans that were repaid.' That's a very good indication! :)"

    Sorry, Marvin, you've got your facts wrong. First of all, the $1.8 billion profit has absolutely nothing to do with the blog entry above. The $1.8 billion profit comes from TARP, which didn't exist and wasn't even under consideration at the time this blog entry was posted in July 2008.

    Furthermore, TARP was signed into law by President Bush, not President Obama. Giving Obama credit for Bush's actions is dishonest.

    Finally, any TARP gains from bailing out the banks is being overwhelmed by losses from bailing out the auto industry. The banking industry has good long-term economics working in its favor. The auto industry does not.

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