Posted on August 31st, 2007 by Jonathan Dalton

Here are some of the highlights from President Bush’s press conference this morning outlining plans to provide relief to struggling homeowners.

Some of the usual blog geniuses already are screaming for the government to be overturned because of this “bailout” plan, as if Bush and Bernanke will be at the local Circle K handing out checks. I’m just not seeing it.

What I’m seeing is this quote:

“We’ve got a role, the government has got a role to play — but it is limited. A federal bailout of lenders would only encourage a recurrence of the problem. It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.”

And what I’m seeing are these particulars …

• FHA will begin a new program called FHA-Secure which will allow homeowners with a good credit history but are unable to meet their current payments to refinance into an insured FHA loan. (If it truly was a bailout, would they really be moving from one mortgage to another?)
• Bush called on Congress to adjust the tax code, apparently to deal with short sales being taxable events. The speech keeps referring to tax implications on a refi but the scenario he lays out is a short sale. As it stands now, if a homeowner owes $300,000 but only can sell for $250,000 - the $50,000 would be taxable income.
• Bush discussed development of a new “foreclosure avoidance initiative” to help struggling homeowners find a way to refinance. (Again, if this were a bailout, I don’t think the owners still would have a mortgage at the end of the day.)
• He also outlined ways the government is looking to make the mortgage industry more “transparent” including novel concepts such as explaining to a borrower the details of their loan.

Moving toward FHA financing isn’t a bad thing. A lot of homeowners with these exotic loan products might have been able to get an FHA loan once upon a time, but a lot of lenders avoided the program because of the extra paperwork and hoops involved.

I’ve said it three times before and I’ll say it again. I’m not seeing a bailout. I’m not seeing where the rest of us are going to be spending our money to bail out those who can’t afford their current mortgage.

If I’m missing it, read the transcripts and tell me where.

UPDATE - ADDITIONAL COVERAGE

• FHA Secure: A Political Power Move Disguised as a Helping Hand to Those in Need
• Busy News Day: Bush & Bernanke Both Talking Housing
• Let the Lenders Eat Cake
• Bush’s Plan to Help Borrowers has Some Merit but Isn’t Enough to Matter
• Bush to Propose Bailout But Likely Won’t Call it a Bailout
• President Bush Announces Plan to Aid Homeowners in Trouble

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Categories: Real Estate Financing, General Real Estate