WASHINGTON - Investors could sell up to $15 billion of troubled mortgages to the government under a plan key House members are discussing to bolster the U.S. housing market.Next year your taxes might very well be used to subsidize refinancing that upside down ARM mortgage that your want-to-be house flipper neighbors bought two years ago, you know the ones... they make $50K a year, yet still managed to buy a house for $600K. Yes those people.
The tentative plan would allow the government to purchase up to 1 million mortgages over five years in an effort to help struggling borrowers avoid foreclosure and financial markets avoid more credit-related losses. The loans would be bought by the Federal Housing Administration, a Depression-era agency that insures loans made to borrowers with poor credit.
The effort shows that the housing crisis has evolved to the point where government officials are considering bailing out large groups of borrowers and Wall Street investors — something that seemed anathema to Democrats and Republicans all last year. Still, many lawmakers and the Bush administration have been leery of proposals that would transfer risks to U.S. taxpayers.