There’s a proposed Federal Program to assist Banks and borrowers (one of hundreds) by paying Banks $1 for every $2 a Bank writes off on a loan. Why ‘write off’ any part in the first place? Because many of these homes are worth less than the debt; they’re underwater (banks call this “negative equity”).

Sounds great, right? $75 Billion has been allocated. That’s the equivalent of a $150 Billion write-down on mortgage balances. Nobody knows how, when, or if such a program will ever get off the ground, or who will be “eligible.”

It is supposed to help those who were victims of “predatory lending practices.” In other words, you’ll have to prove you weren’t lying when you filled out that loan application. (Weren’t they called “Liars’ Loans?”) So, there goes 75% of the potential pool of borrowers. (Come on people, does anybody really believe that a nail salon worker could afford a $750,000 house? Or that the worker had a good faith belief they could? What turnip truck did we just fall off of?)

And, just because the government is what the government is, the bailout won’t wipe away all the “negative equity.” No sir. The government wants to eliminate as little negative equity as possible – just enough to “hope to get [borrowers] committed again.” “Committed” to what? To staying in the house and not walking away from the mortgage, and renting the identical place just down the street for about half the cost?

I sure hope this program works. (Hey, I can dream, can’t I?)

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