Want to buy an overpriced house in Las Vegas? You’re about to!

By Matt Kibbe Posted in | | | | | Comments (16) / Email this page » / Leave a comment »

Thanks to Matt for stopping by to post this. Matt Kibbe is the President of FreedomWorks. --Erick

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 Dodd-Frank 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.

Dodd-Frank 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.

Read on . . .

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 Dodd-Frank, 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!

To view a coalition letter by leading taxpayer groups that was sent to the Senate today opposing the bailout, please click here.

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Want to buy an overpriced house in Las Vegas? You’re about to! 16 Comments (0 topical, 16 editorial, 0 hidden) Post a comment »

If only I could be a liberal and subscribe to the belief that if I just give up all my personal responsibility to the government, life would be better.

Sometimes I curse having tasted freedom, for the fire it has put in my belly to preserve it.

Dependence is Slavery.

This is from the man who gives 10,000 dollars to charity to nullify 5 years of reduced interest on a MILLION DOLLAR MORTGAGE

Then he expects the tax payers not to notice he got a 10K/year bribe not 10K lump sum ???

The man should be under indictment and impeachment proceedings.

"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

There was a time that a person was covered in tar, then had feathers thrown on them.

They would then either be chased out of town, or lifted up on a big rail and carried out of town.

It is a shame that some traditions have faded.

Dependence is Slavery.

Tarred and feathered and run out of town has changed into this:

Be honest, we all wish to be VIPs

Where was this guy when Newt got his book deal?

and get caught and return the money, is all forgiven?
Obama's guiding principle: "I reserve the right to revise and extend my remarks."

I donate 10% to a charity of my choice and keep the rest, is all forgiven?
Obama's guiding principle: "I reserve the right to revise and extend my remarks."

Remember... Congressmen (especially Democrat Congressmen, but the same seems to be applying to Republicans as well to a lesser degree) are not like us common folk and so they can, as a 'public servant' get away with quite a bit that we cannot.

Heck, remember the uproar when the feds searched the office of William Jefferson? All the Congressmen having a temper tantrum over it?

Made me, instantly, wonder what is hidden in THEIR offices.

Dependence is Slavery.

Who knew that ethics could be so profitable?

"Most ethical Congress ever."

Some bet Black, Some bet Red, The Congress Bets Potato.

Before I left for work I saw something on the news about them looking into the Dodd thing, lets hope they do that before this shame gets passed.

Voting for the Sexy(Pres) - Sexy(VP) Dream Ticket
Jindal/Palin 2012

BUT... (and I've asked this ? before here...)

How do we prevent the Leftocrats from painting us conservatives as cold, uncaring jerks who are only concerned about protecting our own riches? After all, we're just the rich old fart party who looks out for the welfare of the oil companies, and we don't care about those poor people who lost their homes. Yeah, we can chant "Personal Responsibility!" until the cows come home, but the mushy middle voters, who are really the ones we have to go after in November, probably won't look kindly on a cold, uncaring policy (ie. "screw the bailouts!")

We've discussed the abysmal PR that the GOP seems to have - simply voting against the bailout will not go very far in improving our PR position. So what does the GOP propose as a solution to the problem? Just let it go? That don't play in Peoria... (and I used to live 45 mins from Peoria, so I am familiar with this... :-) )

The Unofficial RedState FAQ
“You are not only responsible for what you say, but also for what you do not say. ” - Martin Luther

Almost as sure and certain as Death and Taxes....

You will ALWAYS have a hard time spinning the taking of personal responsibility as a positive thing when you're talking to a group of people who have been conditioned by a few decades of apathy.

Dependence is Slavery.

but that doesn't solve the problem. We have a PR problem, and voting down legislation that appears to the common person to be a good thing will not help. What is the GOP's response to the problem? Tough nuts, Charlie - you shouldn't have gotten that big loan? Too bad you were too stupid to realize that your house really isn't worth $500K? That's a sure way to lose the election...

The Unofficial RedState FAQ
“You are not only responsible for what you say, but also for what you do not say. ” - Martin Luther

The people who screwed up their situation have much to scream about and the incentive to do so.

The people that didn't are busy making certain they don't in the future.

The hard part is making the people that didn't (96%+) that they are getting stuck with the bill for those that did.

"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

I'm not talking about apathy on the part of the people with these loans... I'm talking about the apathy of the general public, trained up to believe that dependence upon the government is ok.

They're the ones that we are going to have a hard time winning over.... you have to convince the apathetic to take on responsibility, which is always an uphill battle.

As for the loans, it is the consequence of greed. Greedy banks gave out loans to people that they really knew couldn't pay them back. Greedy people took out loans to buy a house that they couldn't afford (which is why they decided to get an ARM with an initial payment so large that it took up far too much of their budget even as interest only)

This is a clear example of people losing out when they submit to greed.

While I feel for the ignorant ones who really felt that at a time with historically low interest rates, it was ok to get a house that took up WAY too much of their budget, leaving no room for increased payments..... I still don't think it is the job of the government to bail people out.

This has hopefully served as a learning experience for these folks so they know that if you get something other than a 15 or 30 year fixed rate mortgage, you're begging for trouble.

But, again, that gets back to taking personal responsibility and holding yourself accountable for the results of your actions. That is not something that is taught anymore.

Dependence is Slavery.

I would do three things

1) Propose a modest aid package for homeowners who are having trouble with their mortgages because they've lost their job in the economic downturn. See- we're not heartless.

2) I'd make a big production about aggressively prosecuting any mortgage broker or lender who engaged in illegal predatory or deceptive practices. See- we're not going to roll over for big business when they break the rules.

3)I'd appeal to what I hope to God is 51%+ of this country who were reasonably responsible with their financial decisions- laud their behavior, and cite examples of scam artists who bought with no money down then took out $$ with a home equity line 18 months later. Basially demonize the crooks and fools who made poor decisions and make the case to the 51% of the country with some reasonable degree of financial responsibility that they shouldn't have to pick up the tab for at worst scam artists or at best fools who thought they could live beyond their means.

"Always be honest with yourself. Even if you are honest with no one else."

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