Hope You Like Shacking Up with Your Uncle Sam

to turn up the thermostat... I'm freezing in here!!!

NYT: The White House plans to propose legislation that could allow a few million homeowners to reduce monthly mortgage payments by refinancing their current loans into new ones guaranteed by the Federal Housing Administration.

The program would broaden the availability of government-backed mortgages to include many borrowers whose loans are held by private companies and who have been unable to persuade those lenders to reduce their interest rates. Existing federal programs focus mostly on borrowers whose loans are owned by the government.

The new program will be directed at people whose mortgage debts exceed the value of their homes, according to a senior administration official who spoke on the condition of anonymity because the details have not yet been finalized. The official estimated that the program could benefit two million to three million homeowners who have loans that are not guaranteed by the government, and that the program’s cost would not exceed $10 billion.

As Mish accurately points out: Finally, and most importantly, every loan that is refinanced will be paid off in full. Thus, any bank, hedge fund, mortgage provider, or GSE that is paid off on a nonperforming loan will be immediately made whole.

This is a massive backdoor bailout of banks, mortgage companies, hedge funds, foreign banks, and anyone else holding mortgage related garbage.

If this comes to fruition (and I think there is a high probability that it will since it will appeal to both Democrats and Republicans) I suspect that the offer to refinance millions of  "responsible homeowners" (pffffftttttt) into loans made at bargain basement prices (artificially low interest rates) are going to prove to be a bit of a trap for anyone who takes the FHA up on the offer and here's why - the Republicans will sign on so long as there is a caveat included that the debt is not extinguishable in bankruptcy much the same as student loans.  Responsible homeowners (just threw up a little in the back of my mouth) are going to become grist for that mill - indentured servants to a government that they believe can save them from themselves.  As my dear blogging buddy Adrienne and I are apt to say: Careful what you wish for kids, 'cause you might just get it.  I'm still madly in love with you JDA - keep that in mind TLP - better be treating my girl right.

I'm told that Uncle Sam never puts the damned toilet seat down and he gets up two or three times each night and his farts can peel paint off the wall and he leaves his toenail clippings in the sink and he listens to the television set with the volume blaring and he sometimes eats with his mouth open and....... you get the picture.