2. Myth: “The bill offers a bailout to lenders.” • Mr. Jakabovics: “To take advantage of an FHA loan guarantee, lenders and investors must take a “haircut” and pay closing costs plus an insurance premium up front.” • Correct Answer: The bill is linked to legislation that takes the worst loans from our nation’s lenders portfolios and transfers them to the Federal Housing Administration which is Government funded. Am I missing something here?

Furthermore, “an insurance premium “ PMI, MIP has always been on loans over 80% loan to value on ALL agency loans funded by Fannie Mae, Freddie Mac and FHA. The insurance premium will not represent a change from the norm as the writer infers. I assume that the “haircut” refers to the fact that all loans will be trimmed to the actual appraised value. This will still present FHA with an an “at risk” loan at 100% LTV.

3. Myth: “The bill offers a bailout to homeowners. “ • Mr. Jakabovics:” Under the House’s Home ownership Retention Mortgage program and the Senate’s Hope for Homeowners program, each part of the legislation now before Congress, individual homeowners would have to pay an ongoing insurance premium to cover the costs of the FHA credit enhancement.” • Correct Answer: Ditto from above.

4. Myth: “There is no need for Congress to act; the private sector’s Hope Now Alliance has been very successful in making necessary workouts.” • Mr. Jakabovics: “Few borrowers have been offered substantive, long-term modifications to their loans. Moreover, a loan-by-loan approach to the housing crisis simply can’t address the scale of the need.” • Correct Answer: I agree that Hope Now Alliance is inept. However it is the best response the Executive branch could muster with the Legislative branch bickering and fighting about which side of the aisle can claim credit for “solving” the mortgage crisis.

A loan by loan solution is exactly what is needed; sweeping legislation that over regulates the banking industry will stifle the flow of money. History has proven time and time again the when congress tell the banks who and how to loan their money they simply stop loaning it.

The truth is, both sides deserve the blame here. In an election year neither Republicans nor Democrats are going offer much in the way of concessions that until after the election. The only difference is that the Democrats have ABC, CBS, NBC and every production being produced from Hollywood cheer-leading their point of view. Admittedly, the Republicans have Fox and Talk radio, until the Dem’s pass the “Fairness Doctrine.”

5. Myth: “The housing crisis only affects irresponsible borrowers, so taxpayers who struggle to meet their obligations shouldn't pay for their mistakes.” • Mr. Jakabovics: “The housing crisis affects all homeowners and even renters. “ • Correct Answer: Agreed, blaming homeowners for getting caught up in the mortgage fiasco is analogous to blaming kids in the 60’s for smoking pot. By in large most people caught up in that atmosphere have learned from the experience and moved on.

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