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Congress gives 300 Billion Dollar Christmas in October Party 29 July, 2008

Posted by David Anderson in Uncategorized.
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I may not believe in Santa Claus, but Uncle Sam is just as good. Congress loaded up a gift for nearly everyone in the massive new housing bill which takes effect in October. The New York Times had this report.

But it also includes many handouts to first-time homebuyers, longtime homeowners, returning veterans and senior citizens seeking to tap their home equity without getting hit with big fees. Millions of people have the potential to benefit in some way.

Huge numbers of people buying homes for the first time, for instance, will be eligible for what amounts to an interest-free loan from the government. Meanwhile, older Americans will now be able to borrow more and possibly pay less for reverse mortgages that allow them tap the equity in their homes.

Whether larding up the bill with all these benefits is good for taxpayers is a debate for another part of the newspaper. But there is no shame in taking advantage of what is offered. In fact, you would be foolish not to.

Well, it seems more like Christmas on the credit card to me. I guess it is a coincidence that the election is in November and the bill takes effect in October. I hope we don’t get the January blues afterward, but I fear they will last for a lot longer when you add up everything else we are borrowing for. Live for today for tomorrow we beg.

I am all for stabilizing the market, but as I wrote in other posts there are much better ways which don’t distort the market nor get us saddled with mounds of potential debt. Allow all borrowers with adjustable rates who are not in foreclosure to refinance if it benefits them. Give tax credits to cover some of the fees. but limit the fees if it is an express refinancing with the same lender. Allow people who are laid off but still making payments no doc refinancing. Give an infusion to the Fannies and be done with it. Don’t create a continuing liability. It is these continuing liabilities which could be the ruin of us.

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