Mortgage bailout, $700 billion rescue plan
The Senate has just passed the mortgage market rescue plan. The bill itself has grown from the original 3 page Treasury proposal, to a 110 page rewritten House bill, and now stands at whopping 451. My question is how many of the Senators voting tonight have read the bill.
Several of my posts on this bailout have expressed a hope that the bill would be limited to the rescue plan - vote for or against, but do not fill this bill with a bunch of add-ons. That did not happen. This bill is loaded, as usual. Senators are going to vote on this bill for reasons other than the good or bad of the bailout idea.
In July, Congress passed a bunch of bill add-ons with the foreclosure relief housing bill. That law was passed in a rush, so Congress could do something.
We are still working through the impact of that hasty legislation. Most of the impact has in my mind been negative. Even the high profile foreclosure relief is much less than advertised. More on that in a moment.
Seller funded down payment assistance
One of the negative pieces of the HERA is the loss of down payment assistance. This has cost the housing market many qualified buyers, at a time when we need to increase the number of qualified buyers.
New legislation was immediately introduced to reinstate the program. HR 6694 had received a good amount of congressional attention until it was overshadowed by the massive $700 billion rescue plan, the urgent bank credit freeze.
The down payment companies are asking that industry professionals contact the House representatives who did not support the rescue plan, but are supportive of down payment assistance, to ask them to leverage passage of the rescue plan by forcing inclusion of HR 6694 (reinstating the down payment assistance).
I think that is a bad idea as it clutters the very important bailout bill, which should be passed on its own merits, as should HR 6694. Pass down payment assistance on its own merit.
Of course, the rescue bill just passed is already loaded down. One more thing might not be such a big deal.
Foreclosure Relief
Today HUD put out its guidelines on the Hope for Homeowners Program (H4H) which has its goal to help 400,000 families to avoid foreclosure.
I will post more detail on the guidelines of this program, but in my opinion most borrowers will not meet the guidelines either because they will not qualify for the income and debt ratio requirements, because of restrictions on closing costs and loan to value, because lenders must approve substantial losses in many cases, or because of the lengthy process involved in many cases to obtain all the different approvals necessary.
No stated loans appear to be eligible.
Debt ratios over 43% require a three month "trial modification period" during which the borrower demonstrates an ability to pay the proposed payment amount.
It does not seem to me to offer much hope.
I will post some more on these three important issues, but I wanted to get this off my chest tonight. I would love to read your comments.
My vote in November will be against the incumbents. My thoughts on the cause of the mortgage meltdown is that Wall Street banks, Fannie Mae, Freddie Mac and Congress paid each other off over the past decade.
Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.
|
|
|
|
|
FHA, VA, Rural Development, Reverse Mortgages, Construction Permanent, Renovation, FHA Renovation
Mortgage lending offices located in Chattanooga, TN
rsmith@aamonline.com
Richard...I agree; I believe that 50-75 years from now, people will look at the election of 2008 as a defining moment.
Issues should be voted on with NOTHING added. If we are debating the mortgage bailout then there should NOT be any pork added...
NO PORK!
Susan,
I do not know that the add ons are a lot of pork - the bill is 451 pages of legalize. Hard to read.
They added FDIC insurance increase to $250,000, tax breaks for industry promoting cleaner energy, an adjustment to the Alternative Minimum Tax to exemp 20 million families from paying higher taxes, extend deduction for some education costs, extend funding for rural school, establish requirements for health coverages of mental health and addiction treatment.
The problem is not whether these are good or bad. They were added to persuade reluctant legislators.
This bill, more than most, should have stood on its own merits.
Richard
How many pages was the original bill. I thought I read only 3 pages and was stunned. At least they should have been able to read it.
Rick,
I added links to the post for the 3 page proposal and the 100 page house version.
The comment above to Susan has some of the add ons needed to persuade votes needed to pass the rescue plan.
Richard
I can only say, CRAP! I am with you, I doubt that any of the senators voting on the bill knew what it said.
Fred,
It may be that all the addons are good legislation. They just do not need to be tied to this bill. And passage of this bill should not depend on getting some other bill passed.
That may be considered negotiation and compromise, but it seems to me to be corruption.
I am voting the non incumbent in the fall elections. I already voted in our local August election/primary for the non incumbent when there were choices.
Of course every incumbent voted, but what a sign if every incumbent was sent back to the work force to look for a job.
Wow!
Richard