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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (76027)	3/13/2008 12:00:55 AM
From: John McCarthy	Respond to of 116555

Bill to Propose Expanded U.S. Backing of Home Loans Published: March 13, 2008 An influential congressman is expected to offer a plan on Thursday that would provide federal backing to hundreds of thousands of home loans. The proposal would significantly expand an effort already under way to refinance onerous subprime mortgages with loans that are guaranteed by the Federal Housing Administration. The plan by the congressman, Barney Frank, chairman of the House Financial Services Committee, would be more aggressive in addressing delinquent loans. As the financial markets and the economy have weakened, policy makers and industry officials have turned their attention to rising mortgage defaults. At the end of last year, 7.86 percent of all home loans were delinquent or in foreclosure, the highest that rate has been since 1979, the earliest year with data available. Like other proposals floated by banks and regulators, Mr. Frank’s plan would have mortgage companies write down the value of loans to their current market price before they are refinanced and given F.H.A. backing. Participation would be voluntary, however. Mr. Frank, Democrat of Massachusetts, offered a general outline of his plan at the American Bankers Association on Wednesday in Washington. He is expected to file the legislation on Thursday. ’The Treasury Department and the Federal Reserve are expected to announce as early as Thursday an effort to more closely monitor the risks banks take, according to Bloomberg News. Mr. Frank did not mention the prospect of the federal government’s purchasing home loans outright, according to a report by the Stanford Group, a research firm. Mr. Frank and his staff have considered loan purchases in the past, but the Bush administration opposes such an arrangement. In a speech last week, Treasury Secretary Henry M. Paulson Jr. reiterated his opposition to a government bailout. It is unclear how much support Mr. Frank’s bill will receive. Providing loans with the backing of the F.H.A., which serves as a mortgage insurer, could put the government at risk of significant losses if borrowers default on their new, lower debt. Several banks and policy makers have embraced some key ideas that underpin Mr. Frank’s proposal. The Federal Reserve’s chairman, Ben S. Bernanke, has said mortgage companies should write down the amount borrowers owe in some cases. The bank Credit Suisse has recommended a more activist role for the F.H.A., and the Office of Thrift Supervision has proposed creating a financial certificate that would allow investors to write down the value of loans in exchange for a share of the future increase in the value of the home. “Much still depends on the text of the legislation and how it changes as it moves through the House and Senate,” Jaret Seiberg, an analyst at the Stanford Group, wrote in a research note. “Still, Frank’s comments today are a positive as they suggest Democrats want to get a bill enacted rather than score political points by goading Republicans into killing a more radical proposal.” Others are pushing a different tack. The National Community Reinvestment Coalition, a consumer advocacy group, will propose on Thursday that the government buy mortgages at a discount from investment trusts through an auction. After modifying the loans to lower balances and interest rates, the government would resell them to banks and investors, the group’s president, John Taylor, said. The government could use the proceeds from the sales to buy more loans. “This is not a bailout,” Mr. Taylor said. “This is a market-driven solution.” nytimes.com

To: mishedlo who wrote (76027)	3/13/2008 12:12:00 AM
From: John Metcalf	Read Replies (1) \| Respond to of 116555

Isakson is an actual US Senator? You were being kind in only calling him a "complete fool" and a "pandering clown". A small cavil is that "pander" means to offer an enticement to someone other than yourself. "Auto-pandering" is actually theft; a violation of the Eighth Suggestion which used to be important in religious Georgia. Sen. Isakson wants to spend $14 B in $15k increments by sending rebates to homebuyers, in the form of 933,000 little packages of $15,000. That amount of money, in the sale of a $250,000 home would be enough to -- ta da! -- pay a 6% real estate commission! That sorta moves Senator Johnny Clownpander from the well-intentioned fool category to rapacious Viking raider. He could make amends by proposing to fund this program by a 100% tax on commissions on any sale where the rebate applies. Can't the good people of Georgia send a better person to the US Senate? If you will try, I will too.