Steven Jacobs of the Associated Press penned an article under this title and it appeared in various newspapers and online sources.  To read the entire article CLICK HERE.

Tying the $700 Billion bailout plan to the housing problem is a smoke screen and driving me crazy.

Yes, there is a huge problem in the commercial paper lending industry making it difficult or impossible for businesses to obtain funds to continue operations. (UPDATE: I love it when I'm right - here's the bailout of the commercial paper one day after my post! Click Here)Yes, there is serious deterioration of the value of our homes and the disappearance of a limited number of mortgage options. However, the commercial paper problem and the housing problem are really DIFFERENT issues and it would help if the media began to educate themselves so they were not unwittingly misleading their readership.

Why then are the two issues treated as one in the media and by our elected officials in Washington D.C.?

My guess is because most of them don’t really understand the problems (which is the scary part) and, second, they know the best way to get the $700 Billion bailout approved is to scare their constituents into thinking they are all going to lose their homes to foreclosure if the bailout didn’t happen. Hence, let’s just call the entire problem a housing problem.

I read this morning that:

"Experts say the most important thing that needs to happen before the $700 Billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that it’s safe to stare doling out money again.”

This is so misleading it makes me want to scream. Banks do NOT dole out their money for people to purchase homes. Banks and other lenders advance funds that are immediately replenished by selling the home loan to Fannie Mae, Freddie Mac, FHA, or VA. All four entities are operating very well right now and home loans are being approved every day.

The next paragraph goes on to say

“The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit.”

Again, this is a completely misleading statement on two fronts.

First, there is NO lending freeze. I just had my best month in a long time – the result of home owners taking advantage of low rates in early September and refinancing to a lower payment. I checked the Mortgage Bankers' Association figures and they are reporting that in the first 9 months of this year, 7.65 million loans were originated worth $1.53 trillion.  Does that sound like a freeze?

Second, you hardly need “sterling credit” to get a home loan. That is such an exaggeration as to make my head spin. I’ve got a borrower right now with a 641 FICO score that I can get approved on either a Fannie Mae loan or an FHA program. A 641 is not “sterling.”

All that’s really changed in the home loan lending industry in the last 12 months is that they have curtailed the loans being made to people who should not have received them in the first place.

Plain and simple.

If you have ok credit – down to a 580 for goodness sakes! – have employment with verifiable income, and $3,000 to $5,000 you can easily purchase a home in Spokane, and Eastern Washington (or just about any other place in the US for that matter).

Those are hardly insurmountable hurdles for a determined homebuyer.