Bailout Beats Back Conservative Objections

Warning to politicians who believe that it is smart political calculus to come to the rescue of irresponsible/greedy lenders OR borrowers! The majority of voters do NOT want to see a bailout! We CAN see through your supposed concern for 'the litte guy'! Whether or not the taxpayer ultimately winds up paying for any part of a bailout - it sends the wrong message, and voters WILL see through this! It does reward those who must learn from the travesty of the past bubble years, and more importantly - NOT repeat it. Very few homeowners were actually duped. Those in areas facing unemployment issues, who can prove that they were truly victims, should be helped. All others need to pay the piper!

Of even more concern is the giveaway to the Real Estate Lobby, in the form of 'FHA Reform'. The proposed new role for the FHA has nothing to do with its original charter, nor its sensible utilization. WHY (other than for the obvious payback to the Real Estate/Banking Lobbies) are we sanctioning tax payer backing of 97% Loan to Value, 55+ % Debt to Income ratio loans of $730,000??? To borrowers with marginal credit and worse yet - in bubble inflated markets??? The issue is that -thanks to the new mindset of real estate as the 'no lose' investment - would be homeowners had to compete with speculators, purchasing homes that were much more expensive than they had any logical reason to be buying. Prices may have dropped up to 30% in some of the worst bubble areas, but they are still double or triple what they were not very long ago. For those areas to be affordable again to residents of those areas, prices need to return to levels of historic norms of income to price. By keeping the new, higher FHA limits, we are propping up those harmful inflated prices, which will do nothing besides encourage yet more buyers to spend more than they should on housing, and prolong the pain.

The markets worked well when we qualified borrowers for their loans, based on income ratios somewhere below 30%, and required downpayments of 20%. If FHA is to return to its mandate of helping low income folks who lack the adequate downpayment, lets at least require adequate income, and keep it to LOW income people, for affordable housing! The rest of the country, where prices didn't inflate to bubble levels, should not have to pay for the insanity of those few markets!!

j smith of CA 6:07PM June 20, 2008