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This is my effort to share my thoughts with readers about concerns facing our country today.  I believe there is a good chance my grandchildren may be the first generation in the history of this great country not to have a better standard of living than their parents. If so, our generation is to blame. The clock is running out for damage control. .

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Monday
Jul282008

Housing Bill Could Fail to Help

Skeptical, sure the current Congress makes everything questionable. When you have a low approval rating, you have a low trust level.

If you've taken time to read the highlights of the bill, you realize it is fraught with potential shortcomings. The biggest, the bill may help up to 400,000 homeowners from foreclosure. Right off the top, it is estimated that there as many as 6,000,000 more foreclosures looming. Who picks the winners? What happens to the non-winners. Do they accept the reasons why they didn't get help? As the economy tanks more, is the 6M number going to grow? Probably. When people who are highly leveraged are out of work, the mortgage doesn't get paid.

There's that little matter of the big idea about $4 billion to buy and rehab foreclosed homes. In Chicago, this is a license to steal. The guy who sets the price will sell  to his brother-in-law and it will be highly discounted. When it's sold the guy who cut the deal will split with the brother-in-law. Probably it may work that way in a lot of other places too. Lot's of enforcement needed and the government doesn't excel at that. Remember the $100 million in Medicare going to dead doctors?

Frankly, I'm not sure who or what we are bailing out with our tax dollars. If greedy mortgage brokers cut a deal on a NINJA Loan(no income, no job, or assets) who gets bailed? If the mortgagee can't pay any mortgage, I assume they don't qualify for the bailout. Are we bailing out the guy who is paying the mortgage? Are we bailing out Fannie and Freddie--sure. Are we bailing out the banks that made bad loans--sure. Are we actuallly going to help 400m citizens. Doubtful.

As I see it, the rescue package is wrapped in the idea we save those 400,000 homeowners who are going to be foreclosed and can pay the freight if the loan is restructured. But, the truth of the matter, it is not going to bail out many homeowners. It is going to bail out the government(Fannie and Freddie). It will raise the national debt by a trillion dollars. That will have a negative impact on the dollar. That will raise oil prices. That will cause more foreclosures.

Where is the Enron witch hunt at Fannie and Freddie? The malfeasance was no less onerous. It won't happen because too many congressmen and Senators were involved in the fiasco. 

Two last tweaks in the bill smell bad. They raised the amount of the mortgage loan maximum to $650,000. They have a tax break of $7,500 for first time home buyers. Am I missing something? We are trying to fix a problem and we create incentives for people to increase the size of the problem. Would anyone in their right mind except the current lawmakers in the United States do that? Would anyone let them do that? Can anyone stop them from doing it?

My read, this huge bailout is a band aid and the problem will get worse. It will be compounded by the credit card and home equity problems still lurking in the shadows.  Will we bail those out too? Will we just admit that the incentive to earn a good living, pay your bills, grow a small business in America is going, going, gone. Just sit on your ass, do nothing,  your government will  take care of you.

Reader Comments (2)

The only people we should be bailing out are those who were paying their home loans until they lost their jobs as a result of our Governments inability to manage our country. We have no business bailing out the mortgage companies who gave out bad loans to those who had no ability to pay for them in the first place. As for giving even more incentives to purchase more loans is absolutely insane and will create an even larger bailout in the future. We are losing our minds and I can not believe we are allowing this to occur.

Pretty soon we won’t own anything here in the US, as all of our assets will be owned by the Terrorist who are already holding us hostage with foreign Oil.

July 29, 2008 | Unregistered CommenterKen Dozier

The only people we should be bailing out are those who were paying their home loans until they lost their jobs as a result of our Governments inability to manage our country. We have no business bailing out the mortgage companies who gave out bad loans to those who had no ability to pay for them in the first place. As for giving even more incentives to purchase more loans is absolutely insane and will create an even larger bailout in the future. We are losing our minds and I can not believe we are allowing this to occur.

Pretty soon we won’t own anything here in the US, as all of our assets will be owned by the Terrorist who are already holding us hostage with foreign Oil.

July 29, 2008 | Unregistered CommenterKen Dozier

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