Want to buy an overpriced house in Las Vegas?

[Tigermike 3,027]

You’re about to! Thanks Nancy

“This leadership team will create the most honest, most open, and most ethical Congress in history.”

The current correction in the housing market is painful for Wall Street and many homeowners. Not missing an opportunity to ‘solve’ a ‘crisis,’ Congress is attempting to save the day with the

bailout bill that is scheduled to hit the Senate floor later today.

While supporters try to sell the bill as legislation to help folks facing foreclosure, a closer look shows who benefits and who ultimately pays.

creates a new $300 billion taxpayer loan guarantee facility that nearly doubles the size of the Federal Housing Administration (FHA), and allows mortgage lenders and banks to cherry-pick the worst performing and riskiest loans in their portfolios and offload them onto the FHA, creating new loans that shift 100 percent of the liability to the taxpayer.

The Congressional Budget Office estimates that 35 percent of the loans will eventually default even after they are refinanced through the new program. This is hardly a good deal for taxpayers or struggling borrowers but it is a great deal for the banks that get to unload their problem loans. And these are not small loans. There are no income caps for borrowers and the House version of the bill would refinance loans as large as $729,000, which is more than three times the national median home price.

So this is how you are about to buy property in Las Vegas. Someone who recently bought a house they could not afford, with no money down, and from a bank that did not even document the borrower 's employment, suddenly finds himself unable to make the payments.

Both the borrower and lender placed a bet that housing prices would go up forever, and that the borrower would be able to flip the house for a profit if they could not make the payment or before the payment reset.

But that bet did not pay off, and unlike losing at poker, banks and overstretched homeowners are looking to Washington to fix the bad bet.

Under

, the bank will be able to dump the loan onto the FHA after the principal owed has been reduced. But with a one in three chance the borrower will still not be able to make the reduced payments and default, the FHA will and the taxpayer will be on the hook.

Congratulations, John Q. Taxpayer, you just purchased a home in Las Vegas!

Tip of the hat to Redstate

Taxpayer Groups Sign Coalition Letter Opposing Dodd-Countrywide Mortgage Bailout Bill

Proposed legislation rewards risky borrowers and banks with hundreds of billions of taxpayer dollars at risk, potentially bankrupting the Federal Housing Administration.

Washington, D.C. - As the Dodd-Countrywide mortgage bailout bill comes to the Senate floor this week for debate, leading taxpayer advocates stand in opposition to the legislation.

The Dodd-Countrywide bill would create $300 billion in new taxpayer liabilities, allow banks to dump their worst performing and riskiest loans onto the FHA, and create a $500 million new tax on GSEs to fund a permanent new spending program.

FreedomWorks joined the American Conservative Union, Americans for Tax Reform, Citizens Against Government Waste, Club for Growth, Competitive Enterprise Institute, and the National Taxpayers Union in a coalition letter to Senators urging them to reject the Dodd-Countrywide bailout bill.

The coalition letter stated:

“The Dodd plan creates a new housing trust fund that will collect more than $530 million a year through a new levy on Fannie Mae and Freddie Mac. The trust fund in turn makes these funds available to politically active community groups like ACORN outside the normal appropriations oversight.

In addition, the Dodd plan creates a new $300 billion facility that allows mortgage lenders to cherry-pick their worst performing loans and roll them into the FHA, shifting 100 percent of the loan liability to the taxpayer.”

The letter was supported by findings released earlier this week by the Congressional Budget Office’s (CBO) scoring of the Dodd-Frank legislation. The CBO predicts that banks will offload their "highest-risk loans” to the taxpayer, the reports also projects that a shocking 35 percent of the loans refinanced through the program will eventually default anyway at a loss to the taxpayer.

To view the coalition letter, please visit: PDF

http://www.freedomworks.org/newsroom/press...p?press_id=2570

[Auburn85 432]

so what do the responsible homeowners get? can they get their mortgage paid for since they are percieved to be doing a very rare thing... making their payments in the midst of a dun dun dun CRISIS