Senate Bail-Out Bill - What the New York Times Says About It

As housing bill evolves, crisis grows deeper

Most media loves really bad news. It's always sold papers and always will! Here is their current doomsday message about the Housing Bill:

"The mortgage rescue plan currently before Congress, which was designed to help only about 400,000 of the 2.6 million homeowners needing assistance at the time it was created, may fall far short of bailing out the thousands of additional Americans each month who join the ranks of mortgage borrowers in need thanks to an increasingly troubled economy, analysts say."

Let's try to make some sense out of this for us every-day folks:

• The Senate is expected to consider a bailout bill after the July 4 recess. That bill would allow banks and borrowers to refinance troubled adjustable-rate mortgages into 30-year fixed-rate loans backed by the government. Lenders would lower each loan amount to 85 percent of its current value while borrowers would pay a 1.5 percent annual mortgage insurance premium, and any gain in value would be shared when a home is sold.
• An estimated nine million homeowners currently owe more than the market value of their home. To qualify, borrowers would have to demonstrate that they can’t afford their current mortgage payment but have the financial wherewithal to make payments on a new loan with new terms.
• Critics of the proposal suggest that the real estate market will correct itself without Congressional intervention, and that a weak economy, rising unemployment and higher mortgage interest rates could derail the usefulness of the program, which would be managed by the Federal Housing Administration and funded by the mortgage insurance fees, a 3 percent lender fee, and a tax on Fannie Mae and Freddie Mac.

To read the full story, please click here:http://www.nytimes.com/2008/06/29/washington/29housing.html?_r=1&th=&adxnnl=1&emc=th&adxnnlx=1214794471-1wPUSlKP4CUyMb8ECvTjAg&oref=slogin

Historically the United States has had its good economic times and its not so good economic times. This too will pass, and many of us will be stronger for it, though not wealthier! Most of our great-grandparents would roll over in their graves to see the spending habits of our generation, and this current real estate climate is a giant wake-up call for many who have thought of home equity as an ATM machine.

Panic and fear will drive the economy down fast. It is important to realize that this, too, will pass. It is time to revert to thrifty economizing as our grandparents and even our parents did. We will all get through this!