As Housing Bill Evolves, Crisis Grows Deeper

[Pale Blue Dot]

Source: New York Times

When Congress started fashioning a sweeping rescue package for struggling homeowners earlier this year, 2.6 million loans were in trouble. But the problem has grown considerably in just six months and is continuing to worsen.

Representative Barney Frank, Democrat of Massachusetts and a central force behind the legislation, said on Friday that recent reports about falling home prices have rallied support for the plan. But he acknowledged that the plan may not do enough to help homeowners or the housing market. Mr. Frank, chairman of the House Financial Services Committee, said that even after a bill like this, “you may need more.”

Other proposals that have been floated in Washington include expanding the current plan to make it mandatory instead of voluntary for certain home loans; having the government buy loans outright from lenders; and providing some way and some incentives to let homeowners become renters in their own homes.

But not everyone supports government interventions. Some Republicans, like Senators Jim DeMint of South Carolina and Jim Bunning of Kentucky, say the proposal would use government subsidies to bail out reckless lenders and borrowers. They suggest that the housing market will correct itself more quickly if Congress does not intervene.

Read more: http://www.nytimes.com/2008/06/29/washington/29housing.html?_r=1&adxnnl=1&oref=slogin&partner=rssnyt&emc=rss&adxnnlx=1214743985-9PVi+D32IJsWCyZcOO31mQ

[AzDar]

1. Words I thought I'd never type: The Republicans are correct on this one.

The market MUST self-correct.:-(

[ThePowerofWill]

4. Yeah i hate to agree with it as well.

I am against the bailout, however since they bailed out the finacials that help foist this crap on us might as well bail out the regular folks.

Neither should have been or be bailed out. I agree it should have been left to self correction. Sure it would have been painful, but when you get bailed out you set up the expectation if you fuck up you will get bailed out again.

[izquierdista]

5. And which 'market' is that?

The problem with gasbags who jabber about "markets" in the first place is that they wouldn't know a free market if they were standing up on the auction block being sold into slavery.

Where were the low barriers to entry, when size worked to the advantage of the larger mortgage companies who could bundle and repackage the loans?

Where was the transparency of information, when buyers of these mortgage backed securities cared only about the yield and knew diddly about the mortgages behind the yield?

Where was the equality of buyer and seller, when borrowers had to accept whatever bait-and-switch tactics the lender used at the last minute at closing?

Do yourself a favor, read what the axioms of a free market are. And when the axioms don't apply, don't be so quick to nod in agreement with a couple of Republican hacks.

[Barrett808]

6. Word. n/t

[On the Road]

7. I Agree That the Markets Were Distorted

and that pundits and legislators seem to be oblivious of that. However, free unfettered markets let dominant businesses do pretty much what they want, including

-- Erect high barriers to entry.
-- Conceal information
-- Create inequalities of buyer and seller.

To combat those things, markets have to be regulated and managed. The critics seem oblivious to that, too.

[jody]

2. I’m tired of paying debts for those who gamble whether corporations or seasonal workers. n/t

[L0oniX]

3. How about we make a retroactive law that punishes the reckless lenders?

For those borrowers who bit off more than they could chew, too bad they didn't use their brains.





"I disagree with what the majority of the American people want." John McCain

[qwlauren35]

8. Were the borrowers "reckless"? Or just ignorant?

There were a lot of people who were encouraged to buy homes that they couldn't afford with slick promises. Yes, the adage "Buyer Beware" is real, but I don't that everyone was necessarily speculating.

I think mortgage agents were doing a lot of recalculating to give the impression that working-class (and middle class) people could afford more home than was actually feasible. I have had several mortgage agents tell me that I could afford more house than I wanted! When I bought an $80K home, I think I'd been told that I could afford $200-$250K. My idea of quality of life is NOT being house-poor. But not everyone does the math.

I was talking to a 25 year old "girl" a few days ago who felt that she could "afford" $1300 a month for a townhouse. I and another co-worker asked if she'd considered: electricity. Gasoline for the location (40-50 miles from her job). Her telephone bill. FOOD! We didn't even bring up maintenance and upkeep for a house. By the time she added up the BASIC expenses, she was seriously re-thinking "$1300".

I'm sorry. I hate seeing honest, hard-working people get screwed up the butt just for reaching toward "the American dream". Speculators don't get my sympathy. But first-time homeowners who just didn't understand the level of risk in "creative lending" - I think we should be doing something for them.