A Scam to Benefit the Wealthy

This from our own SF Chronicle.

Why should tax payers pay for a mortgage interest rate break (resulting from the proposed increase of the loan limits for Fannie Mae and Freddie Mac) that will benefit only the wealthy minority of this country? Why should "fly over" states be required to pay their tax dollars to support mortgages for our over-priced houses here on the West Coast? As much as the proposed increase in loan limits will personally benefit me, the fact is that I chose to live in an expensive area of America; it is neither right nor fair that people who do not live in crazy-stupid expensive areas should subsidize my choice. If anything, it is those of us who live along the west and east coasts, who have these high mortgages, and who will benefit from the proposed increase in loan limits who should be paying an increased tax and who should bear the responsibility of bailing out Freddie and Fannie when they ultimately fail due to assuming such a massive increase in risky loans.

Here in California such words fall on deaf ears. It is a sad fact that most people support (vote for) that which benefits themselves and not what benefits the general public or what is generally considered good (unless, of course, there is no significant cost to them by voting their conscience). Thus, I fully expect the majority of Californians to support the increase in the GSEs' loan limits as it will benefit most Californians' pocket books (at least in the short term). But what about the rest of America that does not live along one of the two coasts? Why would you support this proposal and why would you be willing to pay your hard earned money to ensure our ridiculously high mortgages?

We don't have to let it happen. We the citizens of this country could stop it if we really wanted to. Now more than ever politicians are listening to the populace. Make yourselves heard.

Congress is about to sell us the biggest fraud in American history... Congress is set to rush through an increase in the mortgage loan limits for Fannie Mae and Freddie Mac (and Federal Housing Administration insurance, too) - from $417,000 to $729,750 - the first step toward a massive financial disaster in which taxpayers will end up paying through the nose.

Contrary to popular myth, Fannie holds a lot of subprime debt, option ARM debt and other dodgy securities... Expansion of Fannie and Freddie's reckless lending is exactly what Congress wants because it's plausibly deniable. Teary-eyed lawmakers can take to the airwaves a year from now and declare: "We had no idea Fannie could go under, but we can't cut and run now. We have to bail out Fannie and Freddie for the good of America! It's going to be a tough slog, but you're getting used to those, no?"

Those same lawmakers won't mention the fact that they get paid far more by real estate lobbyists than they do from our Treasury.

I've spoken with borrowers who stopped making mortgage payments seven or more months ago. None has received a default notice. Defaults may be much higher than banks are letting on. The data lags are growing suspiciously long. Nobody knows what's going on. Seven months without making a single payment! Will Fannie guarantee those loans because they aren't in formal default yet? Nobody wants to know, because if they know, they might be called to testify next year. That's why lawmakers want to raise the limits now and ask questions later.

In support of the economic stimulus bill, Bush will have to face "working American families" and explain that some of their tax money is going to be spent guaranteeing $730,000 mortgages on $1 million homes. It's like some sort of upside-down communism where the poor pay the rich welfare. Why should taxes from families earning $48,000 a year be used to support expensive mortgages in New York, Los Angeles and San Francisco? Welfare for the hungry and homeless is evil, but welfare for million-dollar homeowners facing a tough refi ... well, that's called "helping the economy."

I can imagine the president's radio address playing in the heartland: "We have some families with million-dollar homes on the coasts who are really hurting and so we need you, the working families of America, to stand together with them and help them avoid the kind of home price depreciation that might leave them without a new Lexus for years."

I guess Congress' hope is that median-income families will be too busy using their rebates to buy much-needed groceries to notice that the rich folk are getting way with a new scam.

Don't let me down, my fellow Americans. Let's vote out anyone0 who dares to vote for this scam.