First, a lot of help is going to go to buyers of high-priced homes, not those who really need help after being led on by predatory lending practices. The increase in federal jumbo loan backing from $419,000 to $730,000 has two problems. First, it was done with little debate as to exact amount of increase, etc. Second, it, like some of Bush’s stupider tax cuts, is a temporary provision; eventually, without further legislation, the cap will fall back again.
Given the mortgage deduction allowance on taxes, this is a big change in policy.
Second, why should we reward banks and other lenders for their bad behavior? Aren’t we actually encouraging more of it in the future? And, how do you sort out good guys from bad, whether it’s predatory vs. nonpredatory banks, or struggling first-time homebuyers vs. “flippers”?
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