• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Why Is Congress Risking Billions to Save Nothing?

    This week the House is set to pass legislation to help homeowners who spent too much on their homes avoid foreclosure. From the beginning, the bill’s architects have been ambivalent about how many people their plan would actually help. Over a month ago Rep. Barney Frank told The Hill it was “irrelevant” how many people would actually be helped by his plan: “I would hope a million [would benefit]. It’s irrelevant. There’s no downside. Why not try?”

    Well even that one million Frank hoped to help was overly optimistic. The Congressional Budget Office very quietly released a report last Friday estimating that Dodd’s housing bill, which allows the Federal Housing Administration to guarantee problem mortgages in exchange for reducing the amount owed, would only aid 500,000 households over the next four years. According to the CBO, about 2.8 million homeowners with exotic mortgages will face foreclosure over the next four years. 40% of that 2.8 million have second liens on their homes rendering them ineligible for the program and less than 40% of the remaining group will find their primary lenders willing to participate. An earlier CBO study of the Dodd plan concluded “the plan would not be sweeping enough to restore the housing market or ailing economy.

    So how much will American taxpayers pay for a plan that helps nobody and does nothing to help the economy? The CBO’s Friday study also estimated that if just one-third of the problem mortgages FHA insures fails, taxpayers will be on the hook for “only” $2.7 billion. So the plan now being pushed by Frank would do nothing to help most homeowners at risk, would do nothing to hep the economy, and would cost American taxpayers $2.7 billion.

    In contrast, the Treasury Department has already helped over a million homeowners through their voluntary Hope Now program and are helping thousands more each month. So to recap: the liberal bill in Congress will help only 500,000 people over five years and cost American taxpayers $2.7 billion, while the voluntary Hope Now program costs the American people nothing and has already helped over one million homeowners.

    Posted in Economics [slideshow_deploy]

    One Response to Why Is Congress Risking Billions to Save Nothing?

    1. FunkyConservative says:

      Where was Ol' Barney when the bottom fell out of the Texas housing market in the 1980's?

      As we used to say, "Those yankee liberals can freeze in the dark." I will also add, "Their cars can sit in their driveways empty too!"

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×