Debate over Barack Obama’s $10 Billion housing bailout plan.

Did you know that you, the tax payer, will foot the bill?

We have seen $90 billion of writedowns to date. Standard and Poor’s is saying that you can super size that order. Writedowns total losses are expected to be $265 billion or more.

So far, Wall Street has been shouldering the brunt of the losses. S&P says the next losses will affect smaller financial institutions including regional banks in the U.S., credit unions, and lenders in Europe and Asia.

Just yesterday, UBS, the biggest Swiss bank, wrote down $14 billion of assets.

The largest subprime mortgage servicers should be able to move ahead with loan modifications now that they have worked through most of the problems associated with the requirements of the mortgage backed securities contracts, according to Iowa Attorney General Tom Miller.

“They feel they have the discretion and authority needed to make loan modifications where those modifications benefit the investor and homeowner,” Mr. Miller told the House Financial Services Committee.

“Upwards of 95% of the pooling and servicing agreements do not pose significant constraints, according to the servicers we have met with.” Mr. Miller heads up a working group of state AGs and banking regulators that met with the 10 largest subprime servicers in September and plans to meet the 10 next biggest servicers during the week of Nov. 5.

He noted, however, that piggyback 80/20 loans are a problem because the first and second loans are in separate securitizations with different investors and servicers.

A properly designed bankruptcy bill with firm guidance for modifying loans could reduce the number of expected foreclosures by 500,000, Mark Zandi, chief economist of Moody’s Economy.com, has told a congressional panel.

Mr. Zandi warned that 2 million families could lose their home by early 2009 and that the current cycle of rising foreclosures and falling housing prices could lead to a national recession.

“There is no more efficacious way to short circuit this cycle than by adopting legislation to allow bankruptcy judges the authority to modify first mortgages by treating them as secured only up to the market value of the property,” he testified.

This program is currently being accomplished without legislation AND you do NOT have to go bankrupt! If you would like more information - see Foreclosure Prevention.

He suggested that this legislation should sunset after three years so Congress can review its impact. But he dismissed claims by the Mortgage Bankers Association that such a bankruptcy bill would force lenders to increase mortgage rates and fees.

The founder of Economy.com testified that current voluntary efforts by mortgage servicers to modify loans is unlikely to stop the increase in foreclosures.

Will Subprime Foreclosures Spur $70B in Losses?

Two million households with adjustable rate subprime mortgages could end up in foreclosure by the end of 2009 and lose $71 billion of their housing wealth.

According to a Joint Economic Committee report that breaks down the impact of foreclosures on each state, “The Bush administration needs to take off its ideological handcuffs and act quickly to save financially strapped families from drowning in a tidal wave of subprime foreclosures,” JEC Chairman Charles E. Schumer, D-N.Y., said in releasing the report.

It appears that Charles Schumer does not read the opinion polls. The vast majority of Americans do not favor a government bailout. Most families feel that they should not pay for the mistakes of people that probably should not have ever had a mortgage in the first place.

FACT: From Jan/2007 to June/2007 Bear Stearns paid out over $17 Billion in Bonuses and yet they have 2 bankrupt hedge funds. What should you favor? Is it not time we stand up for what is right?

The Wall Street hedge funds got rich from all the subprime mortgages and all the banks underwrote the mortgages so why make Americans foot the bill? Make those that profited pay!

The report estimates foreclosure losses by state, including projections that neighboring homeowners will see the value of their homes decline by $32 billion.

The congressional report covers subprime foreclosures from the beginning of 2007 to the end of 2009 and assumes that house prices will decline sharply. The Bush administration estimates that foreclosures will not exceed 500,000, Sen. Schumer said, adding, “That is much too low.”

Two million subprime mortgage foreclosures are likely to occur by 2009 if home prices continue their downward spiral, a congressional report said Thursday.

The report also estimated that $71 billion in housing wealth will be destroyed and states will lose $917 million in property tax revenue because of foreclosures.

The report was released by Joint Economic Committee Chairman Sen. Charles Schumer, D-N.Y., and other lawmakers. “State by state, the economic costs from the subprime debacle are shockingly high,” Schumer said in a statement.

“From New York to California, we are headed for billions in lost wealth, property values and tax revenues.” Schumer, along with Sen. Amy Klobuchar, D-Minn., Sen. Sherrod Brown, D-Ohio, and others called on the White House to beef up foreclosure prevention counseling, to let Fannie Mae buy more mortgages and to encourage loan servicers to work out modifications with borrowers.

Before the report was released, the Commerce Department said sales new home sales rebounded in September from summer sales levels that were much weaker than previously reported.

Sales increased 4.8% to a seasonally adjusted annual rate of 770,000 from a revised 735,000 in August. Previously, Augusts’ sales had been reported at a 795,000 pace. The three previous months were revised sharply lower. Last month, the latest Case Shiller home price index showed that U.S. home prices in major cities are falling at their fastest rate in 16 years.

Congress may need to give the Securities and Exchange Commission authority to set higher standards for how Standard & Poor’s, Moody’s Investors Service and other credit rating companies assess mortgage bonds, U.S. Senator Richard Shelby of Alabama said today.

S&P, Moody’s and Fitch Ratings “could have some culpability in taking junk and rating it as investment grade and contributing to a subprime crisis,” Shelby told reporters in Washington. “I would push” for legislation strengthening oversight should the SEC determine it lacks authority to bar any conflict of interest. IT’S ABOUT TIME.

Investors have criticized S&P, Fitch and Moody’s, saying their ratings last year on bonds backed by mortgages to people with poor or limited credit understated the risks and likely default rates, which this year have accelerated to the fastest in a decade.

The companies since July have cut ratings on hundreds of securities and tightened requirements for rating new issues. Shelby’s comments align him with Senate Banking Committee Chairman Christopher Dodd, who on Aug. 1 said he may introduce a bill eliminating what he said are conflicts created when S&P, Moody’s and Fitch advise financial institutions on how to structure securities before providing a rating for the debt.

Ronald Paul Explains Moral Hazard to Ben Bernanke. Dr. Ronald Paul addresses Banking committee sub-prime mortgage market meltdown hearing. Moral Hazard is the topic. The Privately Owned Federal Reserve Bank Corporation chairman, Ben Bernanke gives a lame answer to Ron Paul’s well thought out question.

NEEDHAM, Mass., Sept. 24 /PRNewswire/ — The effect of the subprime mortgage meltdown continues to radiate out across the credit markets. Alan Greenspan, the former Federal Reserve Chairman, stated in recent interviews there is a one in three chance of a US recession. New research from TowerGroup explores the impact on consumer debt and credit cards.

In analyzing four key economic factors that influence both the US economy and consumers’ spending behaviors — unemployment, consumer debt, consumer confidence, and consumer savings — TowerGroup forecasts that even as consumers moderate their spending in the coming months, the number of consumer mortgage delinquencies will continue to rise. Rate relief from federal regulators is only the beginning of the story. Mortgage lenders are likely to bend to public and government pressure to be more flexible when making repayment arrangements with mortgage customers to prevent foreclosure.

NovaStar Financial Shares Down 18%