Bush opposes foreclosure prevention ideas.

The Bush administration has let Congress know that the president intends to veto any bill that contains either of the two biggest solutions to the foreclosure program Congress is working on.

One bill would give bankruptcy judges the right to “cram down” the mortgage amount or interest rate so as to make the mortgage affordable to the person filing bankruptcy. We have reported on that before. There is a general article on bankruptcy in our archives: Should you file for bankruptcy?

The other bill would allow the government to buy delinquent loans at a discount, set them up with lower interest rates, and resell them, with insurance from the Federal Housing Administration (FHA). This would cover an estimated one million “distressed” homeowners (second homes and investment properties would not be covered) and cost the government an estimated $15 billion over five years.

The Bush administration objects to these programs, according to the Wall Street Journal, because they “provide a shift of risk from a private balance sheet to a public one.” To me that is boilerplate nothing. These programs could keep a million or more people in their homes. The people who would be punished are the lenders, because they would not get all the principle and interest they planned to get.

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