Vital Part of Housing Bill is Brainchild of Banks
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/24/AR200806...

The Bank of America part of this story broke over the weekend and was only covered in the LA Times Real Estate Blog and other blogs. Why aren't the cable "news" networks or other mainstream media covering this? Don't the American people deserve to know that, in addition to the $75K Countrywide shaved off Sen. Dodd's mortgage, Bank of America and its employees donated over $70K to him and that Bank of America, which is acquiring Countrywide, and other banks wrote the bailout legislation? Because this legislation helps no one but the banks, it sure looks like they are buying it with their gifts and donations. The Congressional Budget Office determined that 35% of the loans that would be transferred to the FHA under this bill will fail, costing taxpayers billions.

This legislation is a moral hazard and un-American. It takes from the responsible to pay for the mistakes/greed of irresponsible/reckless borrowers and lenders. This legislation goes far beyond just helping people keep "their" (I use that term loosely as they rent from the bank, not own) homes with your money. Under this legislation, people who are defaulting get more favorable fixed rates and a reduction in principle and will get a share of any equity if prices go up when they sell; however, those who bought during the bubble yet are paying on time get no corresponding favorable fixed rates or reduction in principle. Hence, they will need much higher prices than the bad actors in order to not have a loss, let alone make a profit, when they sell. Renters will have to pay for this bailout even though they took no part in causing the problem. So much for doing the right thing! Where is the outrage?

Why is the mainstream media feeding the American people this propaganda about stopping foreclosures and propping up prices instead of telling them the truth? This bill CANNOT stop foreclosures or stop prices from falling. It WILL NOT stabilize neighborhoods. We need more affordable houses, NOT more affordable loans. Neighborhoods will ONLY stabilize when prices FALL enough for people to AFFORD to buy houses with down payments and 30-year fixed mortgages. Housing costs doubled or tripled in many areas between 1998 and 2005. Wages did not keep pace. The prices are UNSUSTAINABLE. The market is in the process of solving the problem. All this legislation does is prolong the downturn and pay off the banks for their recklessly made loans while allowing them to keep the profits they made during the boom.

Congress and the press are playing upon both voter's greed and sympathy to get this bill passed. They play on the greed of those losing their homes who want others to pay their bills and the greed of homeowners that do not want to lose their phantom equity. They play on the sympathy of everyone else by presenting sob stories of those losing their homes, but they never ask the people in trouble where the money they borrowed went (expensive vacations, furniture, granite counter tops, stainless steel appliances, clothes, cars, flat-screen t.v.s, and other toys), or whether they lied about their incomes on the loan documents (one study showed most of those with alt-A mortgages, the next to fail, lied about their incomes), or what possessed them to think they could afford a $500K house on $50K income. When something is too good to be true, it usually is. The truth is that Congress cannot stop prices from falling, nor prevent the foreclosures. The banks and borrowers are in trouble because of decisions they made. I should not have to bail them out.

Those that oppose the bailout are made to look uncompassionate by the politicians and media. The truth is that the politicians that pushed people (especially poor and minorities) into buying houses that they cannot afford are the uncompassionate ones. I believe it is more compassionate to encourage people to live within their means and rent a house for half of what it would cost them to buy it than it is to encourage them to be house poor. Besides, when did home ownership become a right? I thought it was something to work hard for and save for.

One more thing -- I am infuriated every time I read an article (not this one, but most that I've read recently) about how the banks will have to take "substantial" losses before transferring their loans to the FHA -- 10-15% is NOT substantial considering what these banks stand to lose if they had to pay foreclosure costs and then sell the properties for pennies on the dollar! Terms that are a matter of OPINION such as "substantial" should NOT be used in a NEWS article. How about the press stick to just presenting the facts and figures instead of spinning for a change? Also, who will be appraising the houses to determine the current "value" that the "substantial" reduction will be taken from -- the banks or some independent party?

Sorry for the rant, but this bill is nothing but bad news for America.