Bush on Subprime - FHA - Evaluates Market

8-31-2007 9:15 AM MTN

Subprime lending would be lending to someone with little or no credit. If coupled with low equity, this can be a formula for a loan disaster.

GW BUSH Comments– (from scribbled notes taken during broadcast and not from a transcript so a bit of poetic license being used)

Mortgage disturbances are modest.

Claims the markets are in transition and are repricing risk.

The economy is strong enough to withstand turbulence.

The widespread availability of mortgages has been a positive for the nation.

Admittedly there have been Excesses in Mortgage lending (particularly the subprime sector)

Home owners took out loans they couldn’t afford to pay back.

New FHA Programs will allow troubled homeowners who have maintained good credit refinancing options that will offer relief from current mortgage strain.

However, It is not the government’s job to bail out speculators or borrowers who bought homes they couldn’t afford

Action - Asking congress for tax code change to help troubled homeowners.

Tax code with better disclosure by lenders to be required. Better and detailed disclosure by lenders of the fees being charged (a less confusing verbage that is easily understood would be required).

Tax code to impose control and better assure (I assume tougher qualification standards?) that people who cannot pay the mortgages will be prohibited from getting them (a grey area here if done by legislation?).

<--- Mostly positive for a change. I liked (I don't get to say "like" and "GW" in the same sentence very often) the comment - something like it's not the govt's job to bail speculators out or to bail out people who made really bad decisions knowing they couldn't afford the homes they purchased or the loans they agreed to pay.

Note - Mentioned the new FHA plan, a program to allow refinancing of homes by troubled homeowners with GOOD CREDIT. (Bad credit - see paragraph above regarding bailing out) This sounds positive. This maybe a real saving grace for the folks out there who have been struggling but who have been making the payments anyway, perhaps some who will face a rate change (adjustable mortgage) or who are just strapped financially because they bought too high or they borrowed too much. It may not be too bad of an idea to offer help to those in trouble WHO HAVE CONTINUED TO BE FINANCIALLY RESPONSIBLE by keeping their payments current. For the many home owners struggling to "make it," for the ones that have maintained good credit, having a new FHA refinance program for them may be a godsend.

L8TR ----Archer----->