I'm sure some of our more knowledgeable readers will have some commentary on the housing bill, but one thing that caught my eye:
...until Wednesday he had threatened to veto the bill over $3.9 billion in grants for local governments, a provision the White House regards as a giveaway.
Does Bush have a point here? What's that $3.9 billion actually for? Megan is pissed about the whole thing, because it basically looks like Congress, and Bush, have no interest in looking at Fannie Mae or Freddie Mac on a fundamental level:
Instead of moving to put FM/FM into a more easily understood model--either nationalizing them, or privatising--they're making the GSEs even weirder, and of course, piling on more debt.
It's time for Congress to bite the bullet: nationalize them, or take them private. But keeping pet companies on a leash so that you can use them as a sort of housing market slush fund, while pretending that the liabilities you thereby create don't really affect the government, is the kind of thing one expects to see in a banana republic, not a free and prosperous nation.
The Wall Street Journal's reporting seems to cast doubt on the bill's centerpiece--giving banks an incentive to allow people in trouble to refinance:
The biggest boost for homeowners is a program that would allow the FHA to back the refinancing of as much as $300 billion in home loans for distressed borrowers. Under this plan, the lender or investor holding the mortgage would have to accept at least a 15% write-down in the value of the previous loan. The new mortgage would then receive federal backing.
But lenders wouldn't be required to participate, and many are likely to conclude that they are better off proceeding with a foreclosure or offering the borrower some other means of trying to catch up on payments. The Congressional Budget Office recently estimated that the program would lead to 500,000 borrowers refinancing loans totaling $85 billion.
Thomas Lawler, a housing economist based in Leesburg, Va., said he expects the effect of that program to be minimal. "This is probably low on [lenders'] list of options" of how to work out overdue loans, he said.
Of course, as with many things, my perspective is informed by who I am. So I'd love to see some reporting on the most important vestige of slavery and Jim Crow--the wealth gap. My guess is that the news won't be good.
The Beautiful Struggle: A Father, Two Sons, and an Unlikely Road to Manhood 
Ta-Nehisi-
"Under this plan, the lender or investor holding the mortgage would have to accept at least a 15% write-down in the value of the previous loan."
This is ripe for fraud. The write-down will be based on new appraisal by which, even if done well, will be very difficult to determine value. Appraisers will likely be able to overvalue loans, decreasing losses taken on the books for the lenders. And in such a volatile market, it will be very difficult to verify appraisals, even if the government plans to do that.
Posted by asl | July 24, 2008 3:24 PM