Morgan,
An interesting item buried in this bill is the death of downpayment assistance programs like HART and Nehemiah. We now have almost NO options for zero downpayment loans. Some will say that's great news but it is going to mean a further drop in prices in first time buyer/low income areas where downpayments are hard to come by.

Josh, that's really bad news to hear about Nehemiah. It actually makes me really angry. So now people who are a good fit for this program are being punished.

I hate this.

Josh there are two more items buried in there 1)Credit card transactions will now be reported to the IRS and 2)It call for a increase in the ceiling for the national debt by 800 billion..meaning the blank check that Paulson wants is going to have alot of zeros on it..it will push our debt to 10.6 trillion...

The fact that everybody approved it suggests that there are a lot of special interest additions in the bill.

We are guaranteeing $1.5 tril of MBS bonds held by foreigners. I don't see why, except for two reasons:
1) congress may actually believe that backing up the GSE's bonds won't cost us hundred of billions of dollars and that this bill will shore up the GSEs "on the cheap". Ha!

2) Paulson (who I assume knows #1 is false) is afraid to let foreigners take a major haircut on their US mortgage investments for fear that it will drive up interest costs on our overall debt (which could be true).

On other subjects: I assume that the FHA loans on homes with renegotiated debt will not be done in any big way, because the loan servicers are already utterly understaffed to deal with REO's, short-sales, etc... If millions of borrowers start calling in to get their loan balances cut by 20%, the servicers won't even be able to answer the phone calls. Also, since I assume the servicers will only consider balance reductions in situations where it looks like there's a foreclosure looming, won't this incent borrowers who could otherwise pay their payments to start skipping payments in order to scare their lenders into cutting their loan balance?

This is too big a bill not to have MANY unforseen consequences.

I have a client that has suggested just this action. He can not refinance his curreny 6.75% fixed rate (because where rates are now, his savings would not be worth the costs). He hears people are getting lower rates because they are behind, so he mentioned ruining his 750 score and excellent payment history to force the bank to lower his payment.

They can make the current payment, but they prefer a lower one and say they are willing to do it. I advised strongly about the potential issues as credit will be ruined and the lender might not negotiate in the end.... or even foreclose. But I am sure that some out there will try this.

FM, et al.....I saw Barney Frank from the dias of the House Financial Services Committee speaking yesterday in a clip on CNBC. He basically said that if the servicers don't get more cooperative with borrowers, legislation will be initiated next year to deal with them. He basically told the servicers get with the program or your're next! OUCH!

In more stellar news, according to Bankingimplode.com, First Heritage Bank of Newport Beach and the National Bank of Nevada in Reno failed and were seized by the FDIC yesterday.

Life is such a pip right now.