I'm not here to win a popularity contest. If so I probably would not be posting this blog. But I may be opening a bag of beans.
But I want to take a minute and think about the choices I have made and I have seen others make. Sometimes the choices have desirable effects and sometimes not.
The sub-prime mortgage crisis that's been growing since early last summer is one of those times when the effect of those choices is not what one would want.
Democrats in the House of Representatives managed to get included in the package what amounts to a bailout of individuals who made some extremely bad business choices and footing the bill would be every single U.S. taxpayer.
And as part of the stimulus, which has already passed the House, homeowners would be able to seek the protection of the Federal Housing Administration for vastly more expensive homes than before. One provision of the bill would raise the limit on FHA mortgages from $362,790 to as much as $729,750 in expensive housing markets, allowing tens of thousands of mortgage holders to refinance int federally insured (read that as taxpayer-backed) loans. It would raise the cap on loans the quasi-governmental financial institutions Freddie Mac and Fannie Mae can purchase from $417,000 to $729,750. 
I'll call this part of the stimulus package a taxpayer bailout of people who made some extremely bad choices fraught with tremendous risk. What do we learn? I think this is poor policy that sets a dangerous precedent for the future.
Now, the teaser rates offered in the last couple of years have begun to expire and the new monthly payments are starting to kick in. No surprisingly, a great many people are falling behind in their payments.
Last fall, many of the major lenders in the sub-prime market, announced guidelines that would allow up to as many as 400,000 of the sub-prime borrowers to have their rates frozen for a five-year period. Since then many major banks have announced quarterly losses,
their share prices have tumbled with stockholders paying a hefty tab for these mistakes.
The Federal Reserve has cut rates twice in the last several days in an effort to inject more liquidity into the markets.
As in Las Vegas, buyers rolled the dice when they bit off more than they knew they could afford , in attempts to immediately buy into the so-called American dream of the McMansion on the quarter-acre lot with two BMWs in the drive. Like the majority of gambles, they lost; but in Las Vegas, no one bails out the losers. 
Unfortunately, it looks like taxpayers won't be so lucky in the sub-prime mess.
Back in the late 80's, there was a similar financial crisis involving the savings & loan industry that had its roots in speculative behavior in the real estate market. Washington stepped into bail out the industry with taxpayers money.
What what the financial industry & consumers learned is that if we make a big enough mistake the feds will step up and clean up the mess and we will have no consequences.
Now nearly 20 years later are we not conveying the same message to people caught in in the sub-prime crunch? I don't think this is the lesson we should be learning from this. JMHO.
Nannette Turner Saunders, Associate Broker
Short Sales Coordinator
Keller Williams Realty
1709 Laskin Road
Virginia Beach Va
Posted by 
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Everyone thought I was crazy because for the last ten years I've been saying this would happen again. Shame on the government for letting banks offer these types of loans. Shame on the consumers for buying into it.