Some quick thoughts on the housing bill….  

The best thing about the housing bill is that they're going to eliminate the down payment assistance programs that have default rates almost as high as that for subprime arm mortgages. Admittedly there are people who do receive assistance via this program who enter a sustainable home ownership situation, have no problems paying their mortgages, etc, etc. However a default rate of greater than 15% in the first two years is just unacceptable, especially when its on the taxpayer's dime.  

The worse thing about the housing bill is the blank check that Congress just gave to the mortgage GSEs, a blank check that doesn't come with conditions related to reigning in their investment activities, breaking the companies up into smaller and less risky entities, etc, etc. In effect Congress has elected to use tax payer money to back stop the old model, instead of saying: "look we understand that we have to prop you guys up, but if we're going to do that we're demanding some serious changes so we can make sure that the tax payer never has to do this again".  

Instead of choosing to do the right thing and ensuring we have a healthy, sustainable economy by removing key threats to it Congress has decided to go for the short-term fix. Ironic that these folks are now going to get on the campaign trail and tout their ability to help the economy, when they just signed a bill that could conceivably do the opposite.  

The final irony here is that the mortgage GSEs are receiving funds on terms no borrower would ever receive, how many tax payers running arguably insolvent businesses can run to a bank and get a capital infusion on sweetheart terms?  

As for aspect of the housing bill that is supposed to help struggling home owners, I'm sticking with what I said several months ago: the key issue isn't one of interest rates, access to credit or housing prices, it's one of people buying houses they can't afford. The FHA having greater capacity to help refinance loans may help people on the bubble, and/or those who can make prime rate payments on their homes but not their ARMs adjusted rate, but it won't be able to help those who can only afford their home at their ARM (or other exotic mortgage's) teaser rate.  

Unfortunately that's the situation a lot of the people facing foreclosure are in. Additionally who is going to refinance a mortgage that's severely underwater, especially in hard hit areas like Las Vegas, California, Florida and Arizona?  

A lot of the people facing foreclosure are just in unsustainable situations that can't be fixed with refinancing. You can't legislate away the mathematics of severely underwater homes/mortgages and affordability.  

Those who truly want to help struggling homeowners need to look beyond loan restructuring packages and refinancing programs that help those least in trouble, and consider what they need to do  in order to assist those hurting the most. Instead of thinking only in terms of: "how do we enable this person to keep their home?" , they should think in terms of: "how do we enable this person to get into sustainable, affordable housing situation, whether that's renting now, owning something cheaper, or owning in the future? "  

Until politicians (and activists for that matter) confront the realities of the foreclosure problem, of the role buyer's own decisions played in it, etc, etc, they're not going to make much progress towards helping homeowners in trouble. You can't legislate or protest way the mathematic realities of the situation.  

Finally, financial education should be mandatory requirement for anyone to receive assistance of any kind, because an educated homebuyer can taught to avoid these kinds of situations. More important than solving the problems of the present, is putting things in place in order to ensure that we don't have these problems in the future.  

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article.