Democratic Congress Passes Housing Bill-Bush drops veto threat

Ziggae_6 · #1 (**permalink**) 07-23-2008, 03:37 PM

The GOP would have said let them go homeless. So the "Do-nothing" Congress helps with relief. Anything wrong with this? The voting was mostly along party lines:

Quote:

The 272-152 roll call Wednesday by which the House passed a bill that aims to help homeowners facing foreclosure and to prevent mortgage giants Fannie Mae and Freddie Mac from collapsing.

A "yes" vote is a vote to pass the bill.

Voting yes were 227 Democrats and 45 Republicans.

Voting no were 3 Democrats and 149 Republicans.

A look at key parts of congressional housing bill By The Associated Press
Wed Jul 23, 2008

The housing bill Congress is preparing to send President Bush would:

_Give the Federal Housing Administration $300 billion in new lending authority and relax standards to provide affordable, fixed-rate mortgages to debt-ridden homeowners. Any losses would be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.

_Allow the Treasury Department temporary authority to lend money to Fannie and Freddie or buy their stock to avert a collapse of one or both of the mortgage giants. The authority expires on Dec. 31, 2009.

_Create a new regulator and tighten controls on Fannie and Freddie, including power for the regulator to approve pay packages for company executives. Create a new affordable housing fund drawn from their profits. Permanently raise the limit on the loans they may buy — set to revert to $417,000 by the end of the year — to $625,000 in the highest-cost areas. Allow them to buy loans 15 percent higher than the median home price in certain cities.

_Provide $3.9 billion in grants to the hardest-hit communities for buying and fixing up foreclosed property.

_Modernize the FHA and allow it to back loans for riskier borrowers. Permanently increase the size of loans the agency may insure — currently set to revert to $362,790 by the end of the year — to $625,000 in the highest-cost areas. The agency could buy loans 15 percent higher than the median home price in certain cities.

_Bar the FHA from insuring mortgages in which the borrower's down payment is paid by the seller, beginning on Oct. 1, 2008. Place a one-year moratorium to bar the agency from charging premiums based on the riskiness of the homeowner, until Oct. 1, 2009.

_Provide $15 billion in housing tax breaks, including for low-income housing. Give a credit of up to $7,500 for first-time home buyers who purchase residences between April 9, 2008, and July 1, 2009. Allows people who don't itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes.

_Give states an additional $11 billion in tax-free municipal bond authority for low-interest loans to first-time home buyers, construction of low-income rental housing and refinancing subprime mortgages.

_Offer protection from investor lawsuits for mortgage holders that modify loans to borrowers who are in default or about to default.

_Provide $180 million for pre-foreclosure counseling and legal services for distressed borrowers.

Raharu Haruha · #2 (**permalink**) 07-23-2008, 05:38 PM

Quote:

Originally Posted by Ziggae_6

The GOP would have said let them go homeless. So the "Do-nothing" Congress helps with relief. Anything wrong with this? The voting was mostly along party lines:

A look at key parts of congressional housing bill By The Associated Press
Wed Jul 23, 2008

The housing bill Congress is preparing to send President Bush would:

_Give the Federal Housing Administration $300 billion in new lending authority and relax standards to provide affordable, fixed-rate mortgages to debt-ridden homeowners. Any losses would be covered by an affordable housing fund financed by Fannie Mae and Freddie Mac, the government-sponsored companies that finance mortgages.

_Allow the Treasury Department temporary authority to lend money to Fannie and Freddie or buy their stock to avert a collapse of one or both of the mortgage giants. The authority expires on Dec. 31, 2009.

_Create a new regulator and tighten controls on Fannie and Freddie, including power for the regulator to approve pay packages for company executives. Create a new affordable housing fund drawn from their profits. Permanently raise the limit on the loans they may buy — set to revert to $417,000 by the end of the year — to $625,000 in the highest-cost areas. Allow them to buy loans 15 percent higher than the median home price in certain cities.

_Provide $3.9 billion in grants to the hardest-hit communities for buying and fixing up foreclosed property.

_Modernize the FHA and allow it to back loans for riskier borrowers. Permanently increase the size of loans the agency may insure — currently set to revert to $362,790 by the end of the year — to $625,000 in the highest-cost areas. The agency could buy loans 15 percent higher than the median home price in certain cities.

_Bar the FHA from insuring mortgages in which the borrower's down payment is paid by the seller, beginning on Oct. 1, 2008. Place a one-year moratorium to bar the agency from charging premiums based on the riskiness of the homeowner, until Oct. 1, 2009.

_Provide $15 billion in housing tax breaks, including for low-income housing. Give a credit of up to $7,500 for first-time home buyers who purchase residences between April 9, 2008, and July 1, 2009. Allows people who don't itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes.

_Give states an additional $11 billion in tax-free municipal bond authority for low-interest loans to first-time home buyers, construction of low-income rental housing and refinancing subprime mortgages.

_Offer protection from investor lawsuits for mortgage holders that modify loans to borrowers who are in default or about to default.

_Provide $180 million for pre-foreclosure counseling and legal services for distressed borrowers.

People who "lost their homes" aren't necessarily poor. They don't need help buying the house they had. They can afford to rent a home, they probably still have the same income they had (unless they worked in a financial or housing industry), and it's likely that they could still buy a home or at very least save money.

What they should do is restore credit to the people who walked away from their homes. Not only would this lower home prices across the board (which is great for those who lost their homes) but not very good for the banks. In the end, that will not happen and banks will win. However, that's what is in the best interest of the American people. It would cost nothing, and those responsible would get their just deserts, but it's not happening.

Anikdote · #3 (**permalink**) 07-23-2008, 05:41 PM

I disagree with both the bail out money for people losing their homes and for the housing giants. Bailing people out of their mortgages is not a function of government. Bailing companies out isn't a function of the government.

Danik · #4 (**permalink**) 07-23-2008, 05:55 PM

Quote:

Originally Posted by Anikdote

I disagree with both the bail out money for people losing their homes and for the housing giants. Bailing people out of their mortgages is not a function of government. Bailing companies out isn't a function of the government.

I would agree, if the overall impact of the their loss wouldn't affect me as well. The consequences of them losing their home is greater than that of bailing them out. From a responsibility stand point, I don't believe anyone should be bailed out for actions that are obviously irresponsible or otherwise a risk/reward situation that they wish to partake in. I haven't taken a look at the recent bill, but one that was floating around dropped the balance of the loan below the current price of their home, so not only did the bubble not affect them, but it also allowed them to keep some equity. That to me is absurd. That's quite a bit of money on the stock market or in a casino, being given the difference, and on top of that money as if you won.

Anikdote · #5 (**permalink**) 07-23-2008, 06:00 PM

Quote:

Originally Posted by Danik

I would agree, if the overall impact of the their loss wouldn't affect me as well. The consequences of them losing their home is greater than that of bailing them out.

Your right, but that's only because we've become a nation where we believe that the government should right the wrongs of a free market thereby ruining its ability to behave efficiently.

The rest of your post I take no opposition to.

justabubba · #6 (**permalink**) 07-23-2008, 08:54 PM

privatize profits
socialize losses

those companies, which were making lots of money and paying their managers and stockholders massive premiums because of all those "good" mortgage loans they were making, are now tanking
likewise for the investment houses which were buying the securitized mortgages
but the boom went bust when reality set in, once it was apparent those who qualified for mortgage loans were not actually able to pay back what they borrowed
so we have lenders and investors holding mortgage paper on real estate, the value of which is very inadequate to cover the amount of the money they lent or invested
now, the homeowner is faced with a return to the rental market for housing, while the lender/investor is faced with recovering just a portion of the funds it placed at risk

congress is deciding the taxpayer is going to cover the costs so that those borrowers who allowed themselves to become financially overextended will now be able to borrow enough money to pay in full the present lender/investor and cover the losses they would otherwise incur

do not be fooled. this has nothing to do with helping the irresponsible home buyer and everything to do with covering the losses of the wealthy lending and investing institutions. the congress is now gearing up for the taxpayer to cover the losses that the lenders and investors were otherwise going to have to absorb, which losses are due only to greed and stupidity. providing another loan - this time federally backed - to people who obviously are not fiscally responsible, so that they will agree to pay a mortggage which exceeds the value of the home they are living in, is the eyewash being used to hide screw job the taxpayers are about to receive

mortgage holders took a risk
investors and lenders took a risk
we would not have shared in their profits. why will we taxpayers now have to pay for their losses?

Danik · #7 (**permalink**) 07-23-2008, 08:56 PM

Quote:

Originally Posted by Danik

I would agree, if the overall impact of the their loss wouldn't affect me as well. The consequences of them losing their home is greater than that of bailing them out. From a responsibility stand point, I don't believe anyone should be bailed out for actions that are obviously irresponsible or otherwise a risk/reward situation that they wish to partake in. I haven't taken a look at the recent bill, but one that was floating around dropped the balance of the loan below the current price of their home, so not only did the bubble not affect them, but it also allowed them to keep some equity. That to me is absurd. That's quite a bit of money on the stock market or in a casino, being given the difference, and on top of that money as if you won.

I meant to say that the situation is like losing money on the stock market or gambling in general, being given the loss back, and then a sum of cash on top of that as a bonus. It doesn't make any sense, unless they are also trying to bail out people who took credit on their now vanishing equity, which is something that I have always had hard feelings about. Considering a house is not liquid, and the price can fluctuate just like a stock, it doesn't make much sense to me why someone can take the full amount in appreciation on credit. It just adds to the credit craze, and I feel that it adds a terrible incentive for realtors, appraisers, and the real estate market in general to overprice things on purpose for their personal gain as well.

Anikdote · #8 (**permalink**) 07-24-2008, 07:23 AM

Quote:

Originally Posted by justabubba

mortgage holders took a risk
investors and lenders took a risk
we would not have shared in their profits. why will we taxpayers now have to pay for their losses?

Smartest thing I've ever seen you post. Kudos.

Rebellion · #9 (**permalink**) 07-24-2008, 12:01 PM

Quote:

Originally Posted by Ziggae_6

The GOP would have said let them go homeless. So the "Do-nothing" Congress helps with relief. Anything wrong with this? The voting was mostly along party lines:

And well they should have. I didn't force someone to get a mortgage they can't afford. And your appeal to emotion fallacy was noted. Unless they don't have apartments where these people live. You are correct though, this do nothing congress did exactly that....nothing. They spent taxpayer money on a host of bail outs. Shame on Bush for dropping his veto.

MasTequila · #10 (**permalink**) 07-24-2008, 12:05 PM

I think it is deplorable that the government would step in. I stayed out of the housing market during that time because of sky-high prices. Now, I was responsible and those that weren't are rescued. The American way is to profit off of idiots, they have crushed my dreams.

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