Taxpayer bailout for 400,000 "homeowners" | Kevin Colby: News and Political blog

Taxpayer bailout for 400,000 “homeowners” who shouldn’t have had home loans in the first place

The CBO says the home loan bailout could cost $25 billion. But, some analysts think the mortgage bail-out that Bush is going to sign this week could cost $300 billion. Would they be doing this bail-out during an election year? This is just another way for politicians to buy votes.

Who are these people who are going to be bailed out?

* People who knew they were buying more house than they could afford, and who thought that they would be bailed out by rising equity.
* People who got home loans in spite of bad credit ratings … loans spurred by media and government anguish over the unavailability of home loans to bad credit risks.
* People who bought the house, took out the loan, and moved on in knowing full well that they wouldn’t be able to make the payments when the interest rates went up.

So, what would cause mortgage lenders to give loans to low income families? A dozen or so years ago almost every major newspaper in the country was running investigative reports on the mortgage business. These reports told us that these mortgage companies were not doing enough to bring the American dream of home ownership to poorer people. The mortgage lenders were using criteria such as income, job stability, credit ratings and loan-to-value ratio to keep lower income people from purchasing homes. You know, people that really couldn’t afford a home. But, before the feds stepped in and made them do it – the mortgage lenders started lending to people that should be renting. And so now the 95% of the people in this country with home loans that are making those payments each and every month have to pay the price for the irresponsibility of people who shouldn’t have purchased a home in the first place, the banks who knew these people couldn’t afford a home and the feds for sticking their noses where they shouldn’t. That being said, I think 95% of people in this country paying their mortgage is pretty good. The other 5%, well, I guess there is a price for taking out the garbage.

CBO’s Estimate of Cost of the Administration’s Proposal to Authorize Federal Financial Assistance for the Government-Sponsored Enterprises for Housing

Everything you ever wanted to know about the subprime mortgage crisis. You’re going to need a couple of hours to read this.

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