Bush has come up with a plan to save all the homeowners that were "victimized" by predatory lenders and greedy real estate agents. Now that the housing bubble is blowing up, despite Bush's assurances that all will be fine, Bush is trying to find a way to save:
1) Homeowners
2) Banks and
3) Speculators
In other words, the Government will always be there to save you if you make a financial mistake. You are never responsible for your actions. The U.S., which is already heading for bankruptcy, according to Comptroller General David Walker, will just take on more debt to save homeowners from the consequences of irresponsible borrowing/lending practices. There is a limit to this bailout, of course, and it could quite possibly be simple political posturing that has no real chance of passing into law which would reflect poorly on the Democrats.
Bush Moves to Aid Homeowners
President Bush, looking for ways to respond to the subprime-mortgage crisis, will outline a series of policy changes and recommendations today to help borrowers avoid default, senior administration officials said.
Among the moves will be an administrative change to allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to guarantee loans for delinquent borrowers. The change is intended to help borrowers who are at least 90 days behind in payments but still living in their homes avoid foreclosure; the guarantees help homeowners by allowing them to refinance at more favorable rates.
Mr. Bush also will ask Congress to suspend, for a limited period, an Internal Revenue Service provision that penalizes borrowers who refinance the terms of their mortgage to reduce the size of the loan or who lose their homes to foreclosure. And he will announce an initiative, to be led jointly by the Treasury and Housing and Urban Development departments, to identify people who are in danger of defaulting over the next two years and work with lenders, insurers and others to develop more favorable loan products for those borrowers.
The moves are the first visible steps the Bush administration has taken to help stem the fallout from the subprime crisis, which has roiled financial markets and threatened to contaminate the housing sector. Defaults and foreclosures are increasing as borrowers -- many of whom got interest-only or no-money-down loans -- begin having trouble making their mortgage payments as higher rates kick in. Many homeowners believed they could refinance their loans, but that has become much harder as lenders tighten their standards in the face of defaults and foreclosures.
With more than two million loans expected to adjust to higher rates over the next two years, possibly triggering many more defaults, the Bush administration is looking for ways to stem the damage.
"The president wants to see as many homeowners who can stay in their homes with a little help be able to stay in their homes," a senior administration official said. "We're not looking for an industry bailout or a Wall Street bailout. The focus here is on the homeowner."
Mr. Bush is instructing Treasury Secretary Henry Paulson to look into the subprime problem, figure out what happened and determine whether any regulatory or policy changes are needed to prevent a recurrence.
I can recommend a blog or two for Paulson to read that predicted this fallout was coming two years ago. It's too bad that Bush is not very computer literate or familiar with "The Internets".
