the bail out economy ...

While the US Senate is discussing the new stimulus package which is filled with porkies, it also appears that under consideration is a bail out of home loan borrowers.

"The Obama administration is considering government guarantees for home loans modified by their servicers, seeking to stem the record surge of foreclosures that’s hammering U.S. property values.

The proposal, which may also have the taxpayer share in the cost of reducing mortgage payments, is aimed at shielding lenders from default after they loosen loan terms for struggling borrowers."

Full article at http://www.bloomberg.com/apps/news?pid=20601087&sid=axbAdJ_Fb_ds&refer=home

So US taxpayers who did the right thing and didn't irresponsibly go into debts that they could not possibly repay are not just helping out with the bank bail outs but are also going to help bail out home purchasers who had no money to purchase a home in the first place!!

These sub prime purchaser managed to get a home because:

1. Their credit risk was never properly checked.
2. It didn't really matter whether they had a job or not.
3. Their loan was initially fixed interest at an absurdly low rate.
4. Their loan was 100% of the cost of the property.
5. As they didn't have any furnishings the loan increased to allow for those purchases too.

Of course these sub prime home purchasers were no credit risk. Properties NEVER fall in price. The property will be worth at least 20% to 50% more within 12 months of the loan.