Dear Mr. Frank:
I read recently about your proposed housing bailout bill.
Before the final bill is passed by both houses, there are a few things I'd like you to consider:
1) This is supposed to apply to "owner-occupied principal residences only." How do you plan to verify this? The bill summary refers only to the borrower "certifying" this. These are the same borrowers that "certified" lots of things that weren't true in the original loan application. If you are putting $300 million of taxpayer money at risk, enough to refinance more than a million homes, where do you expect the government to find hundreds of thousands of honest, competent loan officers to verify the facts? The loan industry doesn't have many honest, competent loan officers left.
2) The borrow must "certify" (again) that his debt-to-income ratio is at least 35%, and that he did not commit fraud on the original loan. Oh, what a tangled web we weave! "I certify that I wasn't lying when I said I made $100,000 a year, but now I make just $40,000 a year. I need a bailout!" Again, who do you expect to verify these suspicious claims on a million loans?
I have a modest proposal: when someone applies for the bailout, compare the stated income on the original loan to the income reported on the borrower's tax return for the prior and following year. If the numbers aren't close, the borrower should immediately be prosecuted for mortgage fraud and/or tax fraud.
Of course, that might cut down a bit on the number of applications you receive.
UPDATE: Edited to remove the guy's name. I hope nobody harasses him or his employer. He was good-natured and his sign was innocuous a...
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