Housing Bill Of The Day

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Is it just me, or is anyone else getting tired of a new bill coming out of one side of Congress or the other every day proposing to change the FHA guidelines?

I just received a great quote in an email from Cato Institute chairman William Niskanen:

“The Senate has again demonstrated that its guiding principle is ‘Don’t just sit there. Do something really dumb in response to the current perceived crisis.’ This week’s example is the Foreclosure Prevention Act, which passed the Senate by a vote of 84 to 12. One provision of this act is a temporary $7,000 tax credit for buyers of foreclosed properties, the primary benefits of which would accrue to those grieving bankers who made bad loans. Another provision is a temporary tax deduction worth up to $1,000 for families who pay property taxes, the primary beneficiaries of which would be high-income home owners. The most expensive provision is a three-year tax break for homebuilders, which would increase the supply of unsold homes and delay the recovery of housing prices.

“Other provisions include increasing the size of mortgages that the FHA can insure to $550,000 in the most expensive housing markets, providing $4 billion for states and cities to buy vacant foreclosed properties, and, of course, $150 million to provide counseling for those whose homes face foreclosure. One wholly unrelated provision to add another $6 billion of tax breaks to producers of renewable energy passed minutes before the final vote.

“The Senate has long had a reputation for posturing rather than thinking, but this bill wins the posturing prize — for the moment.”

This is getting entirely out of hand. We have a significant problem, but the market seems to be fixing it before the government really does anything.

There is also a great article out today from Alan Reynolds of the Cato Institute that adds a little perspective to the problem. It is titled “Economic Hysteria” . I encourage everyone in the mortgage industry to take a look at it. In addition, Alan Reynolds supplied some interesting information in another post giving some “Background on Mortgage Markets“.