The New Housing Legislation
Jul 26th, 2008 @ 5:10 PM by Alden Smith
NBC Nightly News reported tonight that the new housing legislation will go to the President’s desk for signature on Monday, possibly Tuesday latest. Bush has agreed to sign. All it took to get this through was an all time low in consumer confidence, the worst housing market we have seen in decades, and a lot of people losing their homes before action was taken. The News also reported 2 more banks have failed this week, and it is likely we will see more of this activity before the end of year.
All this is well and good. We need something like this new piece of legislation to bolster confidence, although from what I read and see from the news channels, it is not so well received. Many people see this as just a bailout for Fannie and Freddie, which have generous provisions in this piece of legislation. This will place a very significant tax bill on the heads of American taxpayers, and raise the national de4bt into 14 figures – yes, that’s 14. Although the Federal Housing Administration can guarantee up to $300 billion of the loans that are facing foreclosure, enough to modify an estimated 400,000 mortgages, it hardly meets the numbers we are seeing now. And of course, qualifications depend on the generosity and cooperation of the banks writing down these mortgages.
Ever the cynic, I think that this is what many are calling a simple bailout, and the people who really need help will see it a long time coming. When Moody’s Economy reports that we can see up to 3 million first-mortgage defaults this year, and as many as 1.5 million mortgage holders close to losing their homes,. I have to think it is too little, too late. Certainly, there will be people helped, and they will become government models of the good and great assistance provided by them. But the people on Main Street, struggling day by day to keep a roof over their heads, will be a long time in seeing help coming. And that, boys and girls, is the pity of it all.