The best thing about being suspicious of politicians is that you learn how they think. I actually think this is a GOOD idea. Libertarians will hate it but I think this bill has merit.
Remember my Bailout Post, in March?
I have a little idea about how to save the American real estate market.
Let’s start with the premise that lenders are taking 20-30% hits on short sales. Then, let’s have the US Treasury loan 30% of the balance, of the aggregate debt, to homeowners whom request it, in order to pay down the first mortgage (or second mortgage). If I have $200,000, in aggregate liens against the property, the US Treasury will lend me $60,000, to pay down those aggregate liens, to $140,000. This reduces the lenders exposure.
What type of loan will the Treasury make to homeowners?
The term can be for the lesser of:
1- the remaining term of the first mortgage
2- 65 less the age of the primary borrower.
The interest rate can be the corresponding term treasury rate, plus .5% (for administrative costs). Maybe we can use some of that “yield spread” to coerce a few mortgage brokers to “originate” this government debt (okay, that was completely self-serving). For a 42 year old, with a 27 year term on his first mortgage, the term of this new government loan (in second position) would be 23 years (65-42=23). If a 23 year treasury bond yields 4.1%, than the note rate for the new loan will be 4.6%.
Well, maybe the Members of Congress are reading Bloodhound Blog; it wouldn’t be the first time that happened. Bryant Tutas reports on HR 5830, on Active Rain:
From what I’ve read, and understand, this Bill will give distressed Homeowners an opportunity to refinance with FHA at 90% of value IF their current Lender will agree to a short payment.
One of the caveats is that the FHA will own a piece of the action. When the borrower sells they will either pay, from any profits, a 3% exit fee (a percentage of the original loan amount) to the FHA or a declining percentage of any net proceeds, attributed to appreciation, Read more

Louis Cammarosano, General Manager for 



