Here comes the Federal government to the rescue with the new housing rescue bill.

We all know by now that the housing market had a nice run.  Unfortunately everyone was blinded by the amount of money that was being made that the industry did a terrible job of policing itself.  Irresponsible lending, fraud, and flippers are some of the few problems that flooded this market. Now some perceive this market as a crisis.

It's no surprise that much of our nation lives on credit but banks have tightened up and we no longer have enough equity to use our homes like a credit card.  This is made even harder to stomach as the rise in oil has affected the price of almost everything that is a necessity.  What do we do? Who do we turn to? Is it right for the Feds to take off their glasses and put on a cape so that they can rescue us? Will the market correct itself?

I believe that the market was on track to correct itself.  Lenders are starting to offer more loan modifications.  This solution allows for someone to stay in their home and ride out this cycle.  There's not much we can do about the speculator who thought that they were going to make a quick buck and now walk away from a home because there isn't an immediate return on their money so they cut their losses short.  That's a problem that should have been prevented by the lender prior to that home being purchased.

What this bill offers is very similar to what loan modifications are offering except for the fact that it is now insured by FHA.  So ultimately the taxpayer is going to be responsible for any losses that FHA may incur. I believe in helping out our fellow Americans but there comes a time in our lives where we have to deal with the consequences and not except a bailout. If this bill does pass I'm glad that the FHA is at least trying to share in the profits.  I think that most real estate markets are near or at their bottom so this profit sharing clause is very smart on FHA's part. Below is a link that summarizes this bill.

http://biz.yahoo.com/cnnm/080723/072308_housing_rescue_guide.html?.&.pf=loans