More Subsidies For People Unable To Afford Homes

Wasn't it this bloody-minded government intervention to distort the real estate marketplace that got us into this mess in the first place?

Why are we subsidizing home loans for people with low-incomes? Maybe people with low-incomes shouldn't be taking out mortgages? Why is the FHA encouraging people to buy homes with low down payments? People who buy homes while paying only a low down payment are far more likely to walk away from their homes. They literally don't have as much invested.

The Washington Post reports:

The Obama administration rolled out an initiative Monday to help moderate- and low-income home buyers, launching what sources familiar with the planning said will be a series of proposals aimed at healing two badly wounded areas of the economy: small business and the housing market.

In an effort to encourage homeownership, the Treasury Department announced an initiative to help ailing state and local housing finance agencies provide inexpensive mortgages to underserved borrowers.

Later this week, the administration plans to ask Congress to raise the ceiling on the amount of money companies can receive from the Small Business Administration's major lending programs, the sources said.

The Treasury is also close to finalizing a proposal to use bailout funds to help community banks lend to small businesses. But a high-level meeting Monday between Treasury and White House officials raised questions about the size and some terms of the program and may have delayed its unveiling, the sources said. The administration is also considering ways to help community-development financial institutions, which can offer credit to small businesses in low-income areas.