The Wall Street Journal reports that 600,000 subprime mortgage borrowers could be bailed out under the Bush mortgage plan. As the details of the plan emerge, it's becoming clearer that the plan will punish those with high credit scores. reward some in the middle with mediocre scores, and punish those in the deepest amount of trouble. To get the reward, those receiving a bailout will be put through a battery of financial tests. And mortgage-backed securities (MBS) investor lawsuits are a safe bet if the plan ever goes into effect.
As I posted yesterday, the Bush plan creates more losers than winners. Those 600,000 with the potential to get bailed out are clear winners. The losers include all other mortgage borrowers, any mortgage investor holding the rights to the payments from the mortgages that won't reset upwards, the principle of free markets, and the already-tarnished Bush legacy.
Here are some more plan details: 1.2 million homeowners relatively current on their mortgages would contact credit counselors or their loan-servicing companies that would sort them by their credit and payment history and ability to pay. Those 60 days behind on more than one mortgage payment over the past year would get credit counseling to talk them through the loss of their homes.
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