The Roundup: Bailout Blues

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ENCINO -- Let the wild bailout rumpus begin.

Topping Thursday’s roundup of real estate news, Molly Hennessey-Fiske of the LA Times reports that Congressional Democrats are proposing a bailout of sorts for homeowners at risk of foreclosure. Democrats, she reports, called for ‘steering hundreds of millions of dollars to nonprofit groups to help borrowers refinance their loans.’ Republicans and the White House are quoted saying this is a bad idea, that borrowers ought to take some responsibility for whatever mess they’ve gotten into.

Back story: The LA Times editorial page -- sometimes a friend of Democrats -- has already weighed in against a big bailout, reasoning back on March 14 that ‘providing forbearance is a job for lenders, not taxpayers.’

More back story: The passionate pundit Patrick Killelea (read him here at www.patrick.net) runs a constant campaign against a bailout. If you read his site, or Ben Jones’ www.thehousingbubbleblog.com, you will find there is a very loud group (loud in the sense that they make noise on blogs) that would be very angry if the government starts helping people who borrowed too much money and can’t pay it back. Here’s Patrick’s ‘Stop the Bailout’ link: ‘Politicians will exploit your emotions by saying they want to help people ‘keep their homes’. But remember that the people in financial trouble already had houses. They got into this mess by trying to buy bigger and fancier houses than they could afford. If we do help them, it should involve them moving back into houses they can afford.’ (BTW: The LATimes profiles Patrick Killelea and other housing bloogers here.)

Lastly, worth noting, yesterday’s LATimes/Bloomberg poll found that respondents narrowly favored government aid for low-income buyers facing foreclosure, 50% to 41%. Black respondents were strongly in favor, 85% to 12%. The Times pointed out, ‘The rising tide of foreclosure is expected to hit African Americans especially hard, and civil rights leaders have urged government intervention.’