Housing bill ‘deeply flawed’

May 26, 2008

by Roz Kohls

Government officials are under the gun to “do something” about the home foreclosure problem. They are under so much pressure to show they care, they are about ready not only to “do something,” but to do anything, even if it makes a mess of it.

The mess is called the Housing Stabilization and Homeownership Retention Act of 2008, HR 5830. It was introduced by US Rep. Barney Frank (D-Mass.)

Minnesota’s 6th District Rep. Michele Bachmann, a Republican, called the bill “deeply flawed,” May 8. She said it will help lenders and lawyers, while hurting American homeowners.

Initially, the bill is not to exceed $300 billion. As of May 16, neither the House nor the Senate has voted on the entire package yet.

“The bill even includes a $35 million slush fund for trial lawyers. And, according to the Congressional Budget Office, the bill would help refinance the loans of only 500,000 people – less than 1 percent of homeowners – at the expense of the 51 million homeowners who pay their loans on time, however much they may be hard-pressed to do so,” Bachmann said.

The bill is so broad that homeowners could deliberately and intentionally default on their loans to cash in on taxpayers.

“Lenders and servicers can game the system, as well. The bill invites them to cherry-pick only their worst loans to dump onto American taxpayers,” she said.

Lenders could even dump loans that had been secured through outright fraud, Bachmann added.

Bachmann tried to get an amendment in the Financial Services Committee to put in oversight standards to prevent this kind of abuse, but the Democrats defeated it.

This bill doesn’t help, and it will probably make things worse.

At Easter, our family sat around the dinner table in Lester Prairie and talked about a taxpayer bail-out, and how it would probably end up being unfair. If HR 5830 becomes law, we were right.