They would make it easier for borrowers now holding adjustable rate mortgages that are resetting to higher monthly payments to refinance those loans using the resources of the Federal Housing Administration. The FHA is a Depression-era agency created to help low and moderate-income Americans afford homes.
Under the Bush proposal, which FHA officials said would take effect immediately, an estimated 60,000 homeowners who have fallen behind on payments because their mortgages have reset would be able to refinance with FHA-insured loans. That marks a significant change because FHA does not now insure refinanced loans from borrowers who are currently delinquent.
Great. So if private mortgage insurers and private lenders see someone as a bad risk, no problem! We'll just put the risk on the taxpayers! What could possibly go wrong putting government guarantees on loans for people who are already delinquent?
And, as the AP notes, it's going to get a lot worse:
Housing analysts said it was highly likely the limited steps Bush outlined will be expanded in coming weeks by a Democratic-controlled Congress intent on responding to growing voter anxiety as up to 2 million homeowners worry about losing their homes.
I don't think Bush has ever met a problem that more big government couldn't solve.