 Before people make up their minds about the housing "bailout" plan, please take a look at the article here. It addresses a lot of concerns/worries I have heard here.
They are talking about a potential downside of just $6 billion (about a week and a half of the Iraq spending), and a great potential upside, both economically and socially. Bush administration opposes Democrats' mortgage relief bill - CNN.com Quote:
The bill would not authorize the government to loan taxpayers' money directly to homeowners. Instead, it would authorize the Federal Housing Administration to guarantee up to $300 billion in new mortgages offered by government-approved private lenders. The new mortgages could at most equal 90 percent of a home's current value.
For a homeowner to get a new FHA-backed loan, the holder of the current mortgage would have to accept a loss and take a payment totaling no more than 85 percent of the home's value.
The government would also get a share of profits if the homeowner sold the house in the future and would have to pay the lenders only if homeowners defaulted on FHA-backed mortgages. The Financial Services committee estimates that 1 to 2 percent of the new loans would default, costing the government between $3 billion and $6 billion.
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