House passes mortgage plan

[Chief]

http://news.yahoo.com/s/ap/20070918/ap_on_bi_ge/congress_mortgages

WASHINGTON - The House on Tuesday approved a plan to expand federal backing of mortgages in hopes of helping struggling homeowners avoid foreclosure.

The bill, which passed the House, 348-72, would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

The measure, which exceeds limits favored by the Bush administration, is Congress' first stand-alone bill in response to the mortgage-market tumult of the summer, which came amid a rising tide of defaults and foreclosures. The Senate last week passed spending legislation that includes $200 million to provide aid to nonprofits and other groups that offer counseling and information to help homeowners avoid foreclosure.

House Republicans sharply objected to a $300 million-a-year fund for grants for affordable rental housing and homeownership assistance for low-income families, which would be financed from FHA revenues — a plan also opposed by the Bush administration. But House Republicans mostly were swept along in the vote for the bill, whose overall thrust they endorsed in the face of the mortgage crisis.

"The American dream is in peril for many families in this country as foreclosures rise and dreams shatter," Rep. Betty Sutton, a Democrat from Ohio, a state particularly hard-hit by the default wave, declared in House debate before the vote.

**SCHNIPP**

Here comes the Cavalry!! Throw money at the problem and pray it goes away...this is only round one.

[Waterbuffalo]

What will be the future rounds Chief?

[Chief]

Who can say? Most of this is going to need emergency attention by the next Congress, in order to stave off an all out recession. This is serious stuff that has implications on the worldwide markets, because of to many foreigners who invested in different hedge funds and such, who turned around and floated a ton of bad paper on the sub-prime mortgage market. This is just a ripple in a series of ripples that are being created by what's shaping up to be a Grand Mal Siezure in the world financial markets.

I cannot see how doing a blanket bailout will help, if it includes "bailing out" people who are in dire financial straits due to thier own financial misconduct. Some of these mortgagees deserve to be foreclosed upon now, get it over with, and get a responsible homeowner in there who will make the payments; because if you bail the irresponsible ones out now, they will only turn around and do it yet again somewhere down the road. The easy-credit market will not go away, it will just have to change to accomodate current market conditions again.

Again, most of these people facing foreclosure are NOT innocent victims of mean old lenders. They are a small percentage of all homeowners who are fiscally immature, irresponsible in the extreme, who have treated their houses like they were piggybanks, refinancing every few years in order to tap more equity to go spend on trips to Disneyland, breast implants for mom, cars, bikes, pools, and more stuff for the kids; all "finananced" via credit cards that are just rolled over into yet another risky ARM every time the big bills come due. Since the Bush Administration overhauled and tightened up the Bankruptcy Laws, and you can't just absolve yourself of that debt so easily any more, the real problem has begun to manifest itself in a big hurry.

Every time we fix a credit and lending problem (ala the 1980's S&L Crisis) some college boy finds a new way around the law to create another big financial fiasco a few decades later. I suppose it is the way of things to a degree, but I sure get tired of having to bend to the lowest common denominator...