Don't Think This Housing Bailout Is To Protect Borrowers

[ThomWV]

The Congress and our President are once again pointing our attention in one direction when their purpose points elsewhere. They will make a bailout for credit strapped homeowners the banner of the day, but think about who is really served here. Yes, its true that people are going to be tossed out of houses they cannot afford, but of course they were never able to afford those houses, they were lured into loans that could not possibly be paid back under the terms presented. Now ask yourself who, in the end, benefits if those loans stand, even with lower payments - its the investors who bought those 'exotic' loan packages. So ask yourself, who gets paid in the end - who is the Government protecting, the borrowers who might be able to keep their homes if they can find a way to keep shoveling obscene amounts of money into upside down (a term referring to something financed on which more money is owed than the thing is worth) loans or the wealthy investors on the receiving end of those shovel's full of money?

Once again, they are bailing out the rich while giving lip service to the greater number of people, who are actually in need.

[sinkingfeeling]

1. If you really want a clear picture of the OTS plan, read this.

http://www.truthout.org/docs_2006/022508B.shtml

<snip> To use the OTS numbers, suppose we put up $100 billion to guarantee 500,000 mortgages ($200,000 per mortgage). Let's say 40 percent of the mortgages subsequently go bad, costing an average of 50 percent of the face value, since homes will have to be sold at large losses. That means the OTS scheme will cost taxpayers $20 billion.

Of course proponents of the OTS scheme will point out we still allowed 300,000 low- and moderate-income families to stay in their houses. That is not much to show for our $20 billion investment. First, a substantial number of these homeowners - say 100,000, or one fifth - would have kept their homes in any case. That means we spent $20 billion to keep 200,000 people as homeowners. That's $100,000 per homeowner.

Oh yeah, the policy is an effective way to get money to Citigroup and other troubled banks, so at least it will do some good.