Economic Stimulus Package Redux
Most analysis of the stimulus package seem to miss the point.
The business tax incentives and tax payer rebate checks are a diversion.
Lets mail the working stiff a one time $300 check, while we give $150K and a hall pass to the buyers and banks that got us into the mess.
Where's the beef? The pea is under the pod called the GSE loan limit increase from $417K to $729K.
The more stringent FNMA, FHLMC limits are raised for one year, while the less stringent FHA limits are raised, permanently.
According to California Sen. Barbara Boxer's office: On the average $650,000 jumbo loan balance, a 30-year fixed rate mortgage,
the lower rate (-1%) on the "conforming" GSE jumbo would result in an average $417 per month savings, every month for 30 years!
Thats a $150K subsidy which amounts to white collar welfare for rich homeowners and speculators.
Many of these "homeowners" who are under water, will walk away from their mortgages as prices decline further.
U.S. homeowners with no or negative equity 2006 3.5 million (7% of the 51 million households with mortgages).
With the 10% decline in housing prices at the end of 2007, 5.6 million or 11%.
If prices decline an additional 10% in 2008, the number of homeowners with no equity will rise to 10.7 million or 20.9%.
In effect tax payers will be subsidizing the banks and borrowers...
with non conforming jumbo loans in these areas: California 35%, New York 19.5%, New Jersey 13,5% & DC 21.5%
Millions of 1, 2, 3 & 5 year interest only & teaser jumbos will be reset this year.
Conserative calculations estimate if only 1 million default after a FHA refi, this will result in a $260 billion cost to the taxpayer within 2 years.
There is nothing preventing Countrywide and other lenders from refinancing their delinquent and defaulting "liar loans" with the GSE's under this program.
This stimulus package is despicable, digusting, a disaster and a disgrace.
Should it pass and be signed into law as currently drafted, its constitutional legality needs to be tested.
At a minimum, it is a violation of the GSE charters infringing into the "primary" mortgage markets.
Once again, I urge you to contact your House & Senate reps to have the loan limit increase provision stricken from the bill.
The business tax incentives and tax payer rebate checks are a diversion.
Lets mail the working stiff a one time $300 check, while we give $150K and a hall pass to the buyers and banks that got us into the mess.
Where's the beef? The pea is under the pod called the GSE loan limit increase from $417K to $729K.
The more stringent FNMA, FHLMC limits are raised for one year, while the less stringent FHA limits are raised, permanently.
According to California Sen. Barbara Boxer's office: On the average $650,000 jumbo loan balance, a 30-year fixed rate mortgage,
the lower rate (-1%) on the "conforming" GSE jumbo would result in an average $417 per month savings, every month for 30 years!
Thats a $150K subsidy which amounts to white collar welfare for rich homeowners and speculators.
Many of these "homeowners" who are under water, will walk away from their mortgages as prices decline further.
U.S. homeowners with no or negative equity 2006 3.5 million (7% of the 51 million households with mortgages).
With the 10% decline in housing prices at the end of 2007, 5.6 million or 11%.
If prices decline an additional 10% in 2008, the number of homeowners with no equity will rise to 10.7 million or 20.9%.
In effect tax payers will be subsidizing the banks and borrowers...
with non conforming jumbo loans in these areas: California 35%, New York 19.5%, New Jersey 13,5% & DC 21.5%
Millions of 1, 2, 3 & 5 year interest only & teaser jumbos will be reset this year.
Conserative calculations estimate if only 1 million default after a FHA refi, this will result in a $260 billion cost to the taxpayer within 2 years.
There is nothing preventing Countrywide and other lenders from refinancing their delinquent and defaulting "liar loans" with the GSE's under this program.
This stimulus package is despicable, digusting, a disaster and a disgrace.
Should it pass and be signed into law as currently drafted, its constitutional legality needs to be tested.
At a minimum, it is a violation of the GSE charters infringing into the "primary" mortgage markets.
Once again, I urge you to contact your House & Senate reps to have the loan limit increase provision stricken from the bill.
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