From the Journal's piece on Bush's "plan to rescue delinquent homeowners" (NOT):
Not exactly buried in the fine print. But I guess for traders who can only either read headlines or listen to Jim Cramer, this may be too subtle a point. This "rescue plan" will help 80 thousand homeowners with mortgages less than 363k. I am underwhelmed. AND... I am glad because any serious attempt to actually bailout people who basically just borrowed a lot more than they should have is seriously bad policy.
For now, the administration's primary vehicle to help homeowners will be the FHA, which doesn't originate loans but helps riskier borrowers qualify by guaranteeing their loans against default. By allowing the agency to back loans for delinquent borrowers, the FHA estimates it can help an additional 80,000 homeowners qualify for refinancing in 2008, bringing its total of refinancing guarantees to about 240,000, senior administration officials said....
Still, the move will help only a small portion of homeowners -- and few in high-cost states such as California or New York -- because the FHA faces constraints on the size of the loans it can back and strict rules that borrowers must meet. The Bush administration has been pushing Congress to enact overhauls that would eliminate the required 3% down payment and raise the size of the loans the FHA can insure to as much as $417,000 from $362,790. Senate Banking Committee Chairman Christopher Dodd (D., Conn.) said recently that FHA reform will be among his priorities when Congress returns from its August recess, and a bill is expected to head to the full House this fall.