Barney Frank's Plan To Help Those In Danger Of Default

The StarTribune reports that the bill would have the government back thousands of troubled mortgages.

We'd spread the pain of this credit crisis from those who made ill-advised mortgages to the average tax-payer.

Great.

The FHA (Federal Housing Administration) would insure $300 billion in distressed mortgages.

Homeowners buckling under their mortgage payments would be allowed to refinance into more affordable government-backed loans under a proposal introduced by a House committee chairman.

The measure by Rep. Barney Frank, D-Mass., calls for the Federal Housing Administration (FHA) to insure $300 billion in new mortgages for distressed borrowers, even if they are badly behind on their payments and have poor credit — including those who owe more than their homes are worth.

The bill would substantially relax the standards of the Depression-era FHA in an effort to reach the hardest-hit homeowners, leaving the government responsible for paying off their loans if they cannot.

Frank has described the plan — regarded by some Republicans as a bailout for reckless borrowers — as a measured response to the housing crisis that is necessary to head off further economic problems.

HELP FOR STUDENTS

The House backed a measure aimed at ensuring that students get college loans amid the turmoil in the credit markets.

Passage of the bill on a 383-27 vote comes as worries mount that the tightening credit markets, stemming from the subprime mortgage crisis, could limit financial aid for students.

PROBING INTERCHANGE

The Senate requested a criminal investigation into changes to a $10 million "earmark" in 2005.

Speaker Nancy Pelosi, D-Calif., and top Republicans endorsed an ethics committee investigation of how the language governing the pet project was altered.

On a bipartisan 64-28 vote, the Senate approved a resolution that asks the Justice Department to look into the circumstances surrounding the $10 million expenditure for a highway interchange in Florida backed by Rep. Don Young, R-Alaska, the former chairman of the House Transportation and Infrastructure Committee.