Thread: House Discusses $15 Billion Mortgage Bailout

House Discusses $15 Billion Mortgage Bailout

Tuesday, February 26, 2008 9:25 PM

WASHINGTON - Investors could sell up to $15 billion of troubled mortgages to the government under a plan key House members are discussing to bolster the U.S. housing market.

The tentative plan would allow the government to purchase up to 1 million mortgages over five years in an effort to help struggling borrowers avoid foreclosure and financial markets avoid more credit-related losses. The loans would be bought by the Federal Housing Administration, a Depression-era agency that insures loans made to borrowers with poor credit.

The effort shows that the housing crisis has evolved to the point where government officials are considering bailing out large groups of borrowers and Wall Street investors — something that seemed anathema to Democrats and Republicans all last year. Still, many lawmakers and the Bush administration have been leery of proposals that would transfer risks to U.S. taxpayers.

The plan was outlined Tuesday in a House Financial Services Committee document listing priorities for the year. It is similar to one unveiled last month by Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, who proposed creating a new federal corporation to purchase distressed loans and help struggling homeowners refinance.

Proponents of the new House plan say it should be palatable to critics of any perceived bailout because both investors and borrowers would take a loss. Banks and investors who hold those mortgages — often in complex mortgage securities — would be required to write-down their value, while homeowners would have their loans refinanced into more affordable ones.

"If the economy continues to be a problem, you'll probably have more people jumping onto this," said Rep. Scott Garrett, R-N.J., a member of the financial services panel. Garrett is skeptical of the idea, saying it would reward investors and borrowers who made bad decisions and merely provide incentive for others to do so in the future.

The plan comes as the banking industry has advanced several proposals on Capitol Hill that would allow the government to take on the risk of some bad loans, potentially limiting the scope of losses for Wall Street.

In recent weeks, banks including Credit Suisse Group Inc. circulated their own proposals on Capitol Hill. A Credit Suisse spokeswoman confirmed that a document outlining a plan to expand the Federal Housing Administration's ability to refinance bad loans came from the company but declined to comment further.

The plan would likely benefit the banking industry, though industry officials insist they're not seeking a bailout. Francis Creighton, vice president for government affairs at the Mortgage Bankers Association, said the idea is "exactly the kind of approach that we think (Congress) should be following," as long as the plan is voluntary for lenders.

"We would have to take a big discount if we decided to do this," he said.

Steve Adamske, a spokesman for Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, said banks have "made their pitches, but that's not what's motivating us...We think there's an opportunity here to help homeowners stay in their homes."

There is precedent for such in effort: In the 1930s, the government created the Home Owners' Loan Corp. to help borrowers avoid foreclosure. The corporation made more than 1 million loans to refinance troubled mortgages, and in 1937 owned 14 percent of all outstanding U.S. mortgages, according to testimony last month by Alex Pollock a resident fellow at the American Enterprise Institute.

In addition, the document said lawmakers are working on a separate $20 billion in grants and loans to state and local government to help to buy up foreclosed and abandoned homes. Doing so would be designed to help stabilize neighborhoods wracked by foreclosures. Lawmakers are also proposing to spend $200 million more per year in grants for housing counseling.

Other proposals also are being floated. The federal Office of Thrift Supervision, a division of the Treasury Department, is working on a plan to help borrowers who owe more on their mortgages than their homes are worth.

It would allow an estimated 8 million homeowners with "upside-down" mortgages to refinance into government-backed loans covering the home's current value. Lenders would receive a certificate equivalent to the remainder of the balance owed that could be redeemed if the home were eventually sold at a higher price.

http://www.newsmax.com/newsfront/Mortga ... 75849.html

So let's add 2 + 2 and see if it equals 5

The House now wants tax payer to pick up the tab for each major company ... up to 15 Billion dollars per company.... to bail out wreckless speculators and companies that gouged American Citizens.

This in addition to tax breaks galore from the Bush administration

This in addition to lax oversight of the regulatory commissions by the Bush administration

and now you want us to give them money back after the biggest White Collar Scandal in this Nations History

No, No, No ...... it's time for these companies to pay the cost for they're wrecklessness

It's time for many of these crooks to Include many corrupt officials in the Bush administration (Which includes the biggest crook of them all G. W. Bush) to spend a long hiatus in a Federal Penitentiary

It's time for Ben Benanke and the previous Fed "Greenspan" to face corruption charges and pay the piper in a Federal Penitentiary

All the lenders of high risk loans need to go to prison NOT rewarded for their criminal behavior.

They do not have the right to ask Tax Payers to bail them out with money borrowed from China.

Our country is BANKRUPT so throw these crooks in jail and confiscate all their assets and use that money to help the honest homeowners who did not use deception to get a mortgage.