Politics mortgage news BUSH OPPOSES BAILOUT    Mortgage company news

W expresses his concern for individuals who have lost their homes, but insists that it is not the governments fault nor is it the feds job to bail them out.

"Obviously anybody who loses their home is somebody with whom we must show an enormous empathy,” when asked his opinion regarding a bail-out fund, Bush replied "If you mean direct grants to homeowners; the answer would be `No, I don't support that.'"

Foreclosure starts are on the rise and homeowners in the sub prime bracket have been taking the brunt of it.  With high interest rates and deflated home values, it’s been a double whammy for Americans already struggling to make their mortgage payments.

Fully aware of eminent opposition in the left-legged Congress, G W has displayed interest in providing tax relief to domestic corporations. Bush’s main concern is that the moves do not knock our sheets out of balance.  "We're at the very early stages of discussion," and “Anything that would be submitted to Congress ... would have to be revenue-neutral."

A study by the Treasury indicates that the federal corporate tax rate could stand a 12 point reduction to 27 percent. Further, the tax base would be broadened if the revenue collected would remain static if the number of corporate tax breaks were eliminated.  Predictably, a deluge of protests would pour out from various interest groups bent on protecting tax breaks related to personal interests. The president quips "What we'd really be talking about is a simplification of a very complex tax code that might be able to lower rates," and continues "However, I would readily concede to you that this is a difficult issue." Bush said that the reason there are tax preferences is because "there are powerful interests that have worked to get the preference in the code."

Bush's interest in a corporate tax cut has been coined “irresponsible” in the face of a rising federal deficit. "It's hard to make a case that large U.S. corporations are paying too much in income taxes," warns democratic senator Dorgan.

The Treasury, corporate executives, and economists agree that America’s ability to compete in a global market is being hindered by our current tax system.  It is hard to compete with countries that cater to corporate needs by offering them attractive incentives and tax breaks.  It is no wonder that American companies ponder the idea of moving offshore.

Now, we find ourselves in the midst of a housing slump birthed from escalating interest rates and plummeting home values.  Homeowners are finding themselves upside down in their loans; with debts outweighing the value of their property.  Such concerns are directly affecting stocks as seen by tumbling stock prices.  The Dow was down over 300 points at the beginning of this month.

Bush supports financial institutions willing to work with sub prime borrowers.  He accepts the notion that some borrowers may not have fully understood the terms of their loans and that this may have lead to their distress.  While he does not support a federally funded bail out, he suggests that the government should take and active role in educating consumers about important financial decisions.

It has been estimated that upwards of 2 million ARMs will reset to higher rates in the next year.  This could spell “disaster” to ill prepared borrowers.  In the excitement and confusion of the housing boom, many sub prime borrowers were quick to jump on appetizing teaser rates.  However, reality is quick to set in as rates jump after the first few years.

While we all agree that lax lending standards and the predatory practice of pushing loans through for unqualified borrowers has contributed to our present situation, there is disagreement on the solution.  The Dems favor a “bail-out fund” to help distressed buyers avoid foreclosures and easing investment limits on Fannie Mae and Freddie Mac.  Bush is not jumping on that train “Congress needs to get them reformed, get them streamlined, get them focused, and then I will consider other options."  Bush prefers a solution based on educating borrowers as a means to keep them from biting off more that they can chew.  That's it for your mortgage news daily.