Lawmakers say they want to speed FAST, FAST, FAST RELIEF to homeowners with mortgage woes. But the leading remedy on the Hill, the Frank-Dodd FHA Refinance Plan (H.R. 5830), will take many months before it has any effect at all. Moreover, it’s the wrong prescription. Though not as bad as some earlier proposals, the Frank-Dodd proposal still remains “essentially a government buyout of problem mortgages disguised as a refinancing plan,” Heritage Foundation expert David John writes in a May 6 research paper. And anyone expecting quick relief from the bill …
As Congress mulls what it can do to untangle the housing mess, it should take care to limit its largesse to helping only those people who really need help. We’ve already noted that Washington shouldn’t rush to bail out vacation homes. Or frauds. Or lenders who winked at frauds and gave them loans anyway. Help should also come with a very important string attached: no free lunch. Any borrower or lender must be required to have a substantial stake in any loan refinanced with the backing of U.S. taxpayers. Unless …
