Okay, that would not have been my headline, but when all the news accounts keep saying that the bill will "help" 400,000 homeowners, this fact really does deserve some attention. Just to remind everyone, the bill allows the banks -- not the homeowners-- to decide which loans get placed in the program. If you are a troubled homeowner with the sheriff at the door with the eviction papers, this bill does nothing, as in zero, as in nada, for you, unless you can persuade your lender to take part in the program. The Congressional Budget Office expects that lenders will only place their worst loans into the program and that 140,000 of the homeowners who get new mortgages issued under the program will subsequently face foreclosure a second time. This means that only 260,000 homeowners will on net be able to keep their home as a result of this program, based on the CBO estimates. This is approximately 5 percent of the 5-6 million foreclosures expected over 2008 and 2009.
--Dean Baker
