Congress to bail out bad loans

Congress to the rescue. We want to live in a risk free society. We want the freedom to jump into the latest investment bubble and get rich schemes, but if we lose we want congress to rescue us. We want part of capitalism, the part that allows us to make more. We want the gain, but not the pain. Congress will try to eliminate our pain.

"The bill sets a cap of $625,000 on the loans that Fannie Mae and Freddie Mac may buy and the FHA may insure."

Now why would Fannie and Freddie be allowed to buy such large mortgages? That has nothing to do with helping the middle and lower classes stay in their homes. Could it have to do with the "Truth in Lending" act that goes back to 1968. If there are loans that are too complex for the borrower to understand the original lender must take back the loan. This could cause huge loses to the banking system. Buyers of those bad loans could make the banks take them back. The government probably looks at this bailout as being cheaper than dealing with a collapsed national banking system.

Congress says this bill will help prevent 400,000 foreclosures. There are over 100 million homes in the U.S.!

The politicians wanted "affordable housing." Now that they have it they are trying to prevent houses from becoming even more affordable.

The foreclosures are in the urban areas where banks used to avoid loans. The Community Reinvestment Act of 1977 said banks could not discriminate with their lending. The government forced banks to make bad loans and then the government bought these bad loans through Fannie Mae and Freddie Mac. So now the government will require homeowners and renters who pay their mortgages to buy up the foreclosed urban homes to help out the cities who cannot manage their own budgets.

The bill will provide 4 billion dollars for communities to buy up foreclosed homes. Why? Because the back property taxes owed will first be paid, then the remainder to the banks. The communities want and need this tax revenue for the fine pay and perks of their city and county employees.
All but three Democrats voted in favor of the bill, so guess which communities will receive the grant money to buy the foreclosed properties. It will be the minority communities, the democratic congressional districts, the democratic mayors, who will receive the grants.

"And it increases the statutory limit on the national debt by $800 billion, to $10.6 trillion."

$10.6 trillion our children will owe! I'm required to have a leash on my dog when I walk her. I wish I could put a leash on congress instead.

Charles Tolleson
-------------------------------------http://news.yahoo.com/s/ap/20080723/ap_on_go_pr_wh/congress_housing;_ylt=ArnaIiNvk.Ly1CIr_Pu0_sOs0NUE
Congressional analysts estimated Tuesday that the rescue could cost $25 billion, but predicted there's a better than even chance it won't be needed at all.
The bill would let hundreds of thousands of homeowners trapped in mortgages they can't afford on homes that have plummeted in value escape foreclosure by refinancing into more affordable, fixed-rate loans backed by the Federal Housing Administration. Lenders would have to agree to take a substantial loss on the existing loans, and in return, they would walk away with at least some payoff and avoid the often-costly foreclosure process.