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September 28, 2008

Take a bite of a crap sandwich

GOP House Minority Leader John Boehner called the emergency bailout plan a "crap sandwich," but still thinks he and the rest of the country needs to take a big bite and pass it.

I disagree, and Michelle Malkin has the many reasons why this so-called legislative life raft is really an anchor around the ankles of responsible, mortgage paying Americans -- i.e., suckers.

I listened in on a phone conference this evening with anti-bailout conservatives, congressional staffers, and other Hill insiders. With only one exception, the groups and individuals on the call all opposed the bailout in its current form. They also concurred that this deal is worse than the one Paulson proposed — on constitutional, policy, and fiscal grounds. Phone calls to congressional offices continue to show overwhelming public opposition to the massive, unprecedented government giveaway.

Malkin lays out a series of specific problems with the bailout, but this one is particularly infuriating.

Section 110 is the Democrat-backed “Assistance to homeowners” plan — driven by one of the bill’s key stated goals of “preserving homeownership.”

GENERAL.—To the extent that the Federal property manager holds, owns, or controls mortgages, mortgage backed securities, and other assets ecured by residential real estate, including multifamily housing, the Federal property manager shall implement a plan that seeks to maximize assistance for homeowners and use its authority to encourage the servicers of the underlying mortgages, and considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 257 of the National Housing Act or other available programs to minimize foreclosures.

(2) MODIFICATIONS.—In the case of a residential mortgage loan, modifications made under paragraph (1) may include—

(A) reduction in interest rates;

(B) reduction of loan principal; and

(C) other similar modifications.

Yes, in the quest to “preserve homeownership” at all costs, it appears the government will be determining the value of homes directly in the marketplace — not only reducing interest rates but also loan principal.

Reader Robert calls attention to another micro-meddling section:

SEC. 124. HOPE FOR HOMEOWNERS AMENDMENTS. Section 257 of the National Housing Act (12 U.S.C. 1715z-23) is amended—

(1) in subsection (e)—

(A) in paragraph (1)(B), by inserting before ‘‘a ratio’’ the following: ‘‘, or thereafter is likely to have, due to the terms of the mortgage being reset,’’;

(B) in paragraph (2)(B), by inserting before the period at the end ‘‘(or such higher percentage as the Board determines, in the discretion of the Board)’’;

(C) in paragraph (4)(A)—

(i) in the first sentence, by inserting after ‘‘insured loan’’ the following: ‘‘and any payments made under this paragraph,’’; and

(ii) by adding at the end the following: ‘‘Such actions may include making payments, which shall be accepted as payment in full of all indebtedness under the eligible mortgage, to any holder of an existing subordinate mortgage, in lieu of any future appreciation payments authorized under subparagraph (B).’’

Robert asks: “Is this about renegotiating mortgage rates of existing mortgages? Did I just get screwed for paying a point to lock in 5% fixed rate when my %^&*# neighbor went with no points adjustable rate? How the hell is this fair? I want his new rate and MY POINT BACK!”