This is the first time I hear that the bill offers any kind of bailout to the banks. We’re talking about the bill where banks must voluntarily accept the payoff of up to 85% of market value of the house so that FB’s could refinance their loans with FHA, right?
Same bill. Here’s a link to the actual language of the bill:
Search for ‘300,000,000,000’ to see the language regarding the total amount of mortgages that can be insured under this bill.
I couldn’t find any language about the 85% of market value, but there is some language about insuring up to 90% of the appraised value on page 378.
This bill makes absolutely no sense. Why would a bank sell a mortgage for 85% of the appraised value of the asociated property when, if the appraisal is accurate, the bank could just foreclose and sell the property for 100% of the appraised value? The only reason I can see to do this is if the appraisal is wildly overvalued.
I’m sure what will happen is that appraisers will just value the property at whatever the value of the original mortgage was and the banks will only have to take a 15% loss as opposed to a 30%, 50%, 60%, or however big the real loss is. That’s why this bill is a crock.
The taxpayers won’t be out $300 billion with this bill, but we’ll be out some significant percentage of that amount — probably around $150 billion to $200 billion or so as the banks will just dump their worst mortgages to the taxpayer.
