There’s always something to howl about

President Bush Unveils “FHA-Secure” Program Today

Today, President Bush Announced Steps At The Federal Level To Help Homeowners In Need Of Assistance Avoid Foreclosure. These steps will help homeowners having difficulty paying their mortgages and ensure that the problems now disrupting the housing industry do not happen again. The fundamentals of America’s economy are strong – economic growth is healthy, wages are rising, and unemployment is low. The markets are in a period of transition as participants are re-assessing and re-pricing risk. 

The White House insists that this is not a bailout.  What are your thoughts?  What are the benefits or disadvantages of this temporary plan that aims to alleviate the pressure on the subprime drama?

Comments are encouraged!


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    13 Comments so far

    1. Jonathan Dalton August 31st, 2007 1:49 pm

      As I wrote myself earlier I don’t see the bailout.

      To me, a bailout is akin to debt forgiveness – not switching from one mortgage product to another.

      Maybe it’s semantics but I’m not seeing the rest of us footing the bill for others’ mortgage silliness.

    2. Robert Kerr August 31st, 2007 5:45 pm

      To me, a bailout is akin to debt forgiveness

      Well, that’s one aspect of the plan: a tax debt is forgiven.

      It’s seems obvious to me that it’s a bailout.

      And it’s a slap in the face to every financially responsible American paying his bills and living within his means.

      I’d love to see some Gallup poll numbers measuring the public’s reaction to this proposal.

    3. Bob Seybold September 1st, 2007 1:42 am

      You may consider it a bailout but think about this: Some young families are not really familiar with how lending markets operate. They buy a home and the Realtor sends them to a Mortgage Broker or favorite lender. This family gets sold a bill of goods by the loan officer because they trust the officer and don’t discover that he/she used to be a used car salesman until the hammer falls a couple of years down the road. I know of several cases like that. The family thought it was a wise decision at the time but didn’t read or understand all of the fine print in the loan docs and just took the loan officer’s word.

    4. rob aubrey September 1st, 2007 12:58 pm

      It is designed to stabilize the economy and help some families that may not have good financial advice. If a large amount of people refinance to HUD and then foreclose it may start costing taxpayer’s money. However the group that will qualify may be small I am not sure what all the underwriting guidelines are. But I am certain they will have to qualify.

    5. Jeff September 1st, 2007 2:31 pm

      There are some valuable lessons to learn from this experience. One might be, that buyers might want to look to expertise rather expediancey in the future. Many of those who are faced with this delima chose to utilize the services of amatures, part timers, untrained and unenformed realtors and loan officers. Most state in this country require no training, no experience and no license to be so called proffesional loan officers. Realtor’s are trained in the law but often no nothing of economics. Most where ill equiped to advise the borrowers of the possibilities.

      I am not sure that most people have yet figured out that the market where the vast majority of the borrowers recieved those infamous loans no longer exist. Well not in the same form.

      I mean who knew? Who knew that major multi billion dollar corporations that were set up to loan money to individuals who where not served by the “A” paper lenders, would just vanish with out notice. Who knew. Do you realize that last year refinancing was a viable option for all those borrowers. Have you considered that their foreclosure rate was only 1% higher than “A” paper borrowers. Well that was the way it was prior to their lenders closing their doors forever. One might argure that they should never been granted loans in the first place. But how do your reconcile that with the fact the 95% of the paid as agreed. It is the 5 and 6% increase in their interest rates that are forcing the foreclosures. The media’s bend on the matter just does not reconcile with the data. Bad credit folk did not cause this problem.

      Regarding the bail out. If we are considering the ordinary meaning and context of the words,”bail out” a reasoning mind could not come to that conclusion. Well, not if “we” is defind as the American People. That is because none of what Bush has proposed has any tax consiquence to Americans. FHA guarantees lenders that they will make them whole if they should suffer a loss after using FHA guideline to underwrite a loan. The borrower pay the premium for the mortgage insurance that guarantees that the government will not have to pay and the lender will be made whole. That is not supported by you.

      Look, the law require that borrowers get GFE from the prequalification faze. Then they get another after selecting a home and the terms are explained again at settlement where they get the final figures. If there is something they dont like or dont recognize they have the option of walking away. There are no victims here. Lots of folk errored in their expectations. I did not hear anyone crying when values were running up at 20% per year. No one cried when lender’s loosend the guidlines to let damn near every one buy. Lets grow up and concentrate on the solution. If you signed the paper, you are to blame. If you are to blame then you can make sure that it never happens again. If some one else is to blame then your an idiot and you can just wait for it to happend again next time.

      We all have a choice. So choose.

    6. Malok September 1st, 2007 2:56 pm

      As distasteful as it is to me as a financially responsible American for people to get a helping hand because they were too ignorant/greedy/misled to actually read to what they were agreeing, its probably prudent in the bigger scheme of things. The alternative is to let a somewhat unstable real estate & mortgage market further deteriorate. However, instead of tax debt being forgiven, I’d prefer deferment – where the money owed is deferred for X amount of time. That way, they get some help now to keep afloat, but they still have to pay what is owed.

    7. Dave September 1st, 2007 5:33 pm

      I am all for the provision that would eliminate the tax consequences of a short sale. To tax an actual capital gain is one thing, but for the IRS to see a loss and twist it around so as to interpret is as income is nothing short of thievery IMHO.

    8. BR September 1st, 2007 6:10 pm

      I’m fine with bailing out homeowners, and fine with greedy investors getting nothing.

      Dave, you’re so right. It’s like the owner gets out by the skin of their teeth only to get sacked by the irs.

    9. Heather Barr September 1st, 2007 10:08 pm

      Jonathan, I agree with you (“a bailout is … not switching from one mortgage product to another.”) Re-arranging debt does not a bailout make.

      As a former teacher, my two cents are that the abysmal state of financial education is partly to blame. Many families are facing foreclosure because they honestly didn’t understand what they signed, while flashy and/or pushy sales pitches either intimidated or pacified the borrowers into not asking questions.

      Should consumers be faulted for signing something they didn’t understand? Sure. Should they still be responsible for the debt? Sure. But if the penalty is being kicked out of your home & saddled w/ a huge tax debt for the amount of loan “forgiveness”, who’s benefiting?

    10. Michael Cook September 2nd, 2007 6:55 am

      “I did not hear anyone crying when values were running up at 20% per year. No one cried when lender’s loosend the guidlines to let damn near every one buy. Lets grow up and concentrate on the solution. If you signed the paper, you are to blame. If you are to blame then you can make sure that it never happens again.”

      The problem here is simply that this will happen again. People certainly were not complaining when they were able by some miracle to get a house they never thought they could afford and many were not complaining when they refinanced, cashed out, and subsequently managed that money poorly. No laws ever get made on the upside, they always get made on the downside. Fortunately or unfortunately, investors and bankers will always be smarter than the government and the people they serve. Bailing people out now or creating some costly legislation regulating mortgage practices will only delay this situation from happening again (hopefully). For my two cents any assistance offered should be quanitified and qualified. If you got duped into buying a $500,000 house, forgive me if I am less than sympathic. However, if you got duped into buying a $60,000-$100,000 house, I think there should be some avenue of help for you. The government is great at making arbitrary cut off points in situations like these, so I think they should limit their help to the people most in need.

    11. Thatswhatsup September 4th, 2007 9:30 am

      I am a libertarian so it makes me leery every time I hear about the government getting involved in our private lives. Government should secure our boarders, protect our citizens, and manage national emergencies and that is all. Now that we have an emergency, it is time for the national government to help out a little and then get out. The mortgage crisis we are in is a direct result of greed on Wall Street and has nothing to do with our current administration.

      This being said I, like many, have gotten into a mortgage with an attractive rate and an adjustable feature. The Bush administration did not make me sign the papers. I did this on my own. Now that a refinance is eminent, I am glad that there are options out there. I found a good site to get information on whats up over the weekend. Go to . It has the president’s message and information about who qualifies for the new guidelines. It looks like I qualify and I am considering taking out a 30 YR fixed rate. I will advise on how it goes.

    12. Carlin October 4th, 2007 5:21 pm

      Jeff pretty much summed it up.

      It was much more than shady brokers that coused this mess. Lenders were avertising these insane loans and believe me I know, I used to be on the streets pushing these programs.

      It all comes from wall street and moody&poors insane bond rating that rated these loans AAA when they should have been rated B.
      Look at all the hedge funds going under and you will understand.
      Now wall street is saying it’s all “shady brokers” when it was them pushing out the money in the first place.

      Also , how many realtors wanted to be the one who got more for this listing than a one that just sold down the street? They also had a hand in pushing these people into non prime financing since many have in house broker relations. Same thing for builders.

      There is plenty of blame to go around here.

    13. FHA Secure Programs October 26th, 2007 5:18 pm

      Hopefully this program will save the foreclosures in the United States. The guidelines seem to strict but let’s see if they expand it later.