Congressman says his mail ran '50 to 1' against mortgage rescue

Rep. Kevin McCarthy (R-Bakersfield), pictured, tells the L.A. Times that his constituent mail on the Barney Frank mortgage rescue plan was running "50 to 1: 'Don't bail these people out.' "  McCarthy voted against the bill.

Other interesting tidbits from Richard Simon's piece on latimes.com about how the House vote unfolded today on the mortgage rescue bill:

--One California Republican,  Rep. Gary G. Miller of Diamond Bar, voted for the bill. Otherwise, the vote in the California delegation split along party lines, with Democrats supporting the bill and Republicans siding with the White House in opposition.
--Miller said Frank "helped win his support by adding a provision that would permanently raise the maximum mortgage the Federal Housing Administration can back to $729,750 from $362,790." (Aside: Did anyone ever believe that increase would be temporary?)
--Three Californians skipped the vote: "Reps. John Campbell (R-Irvine), Laura Richardson (D-Long Beach) and House Speaker Nancy Pelosi (D-San Francisco) did not vote. By tradition, the speaker seldom does."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: kevinmccarthy.house.gov

Comments

[formerlahomeowner]

Diligent and prudent savers are being punished. Initially, by very low interest rates and now by this proposed bailout. No wonder the US and the dollar are in decline. These type of legislations make me sick.

[Laker]

Peter,
Our senators and congress man can even get 10000 to 1 mail against the bailout, they will still support and vote for it...They know that we the voters will not punish them...
It is not only renters that are upset and disgusted here. There are also all the responsible home owners, that bought with down payment, or simply live within their means, don't use the House as ATM, and now see that they were all fools and should have used the ATM because government will help pay the bills.

Also Peter, Can you please tell us why do we need FHA to secure loans up to $729,750? When the median price is somewhere in the $430,000-450,000 ???
Why don't they raise the limit to $7,000,000 (million) Yes, maybe that would help get cheap loans and prevent the house prices decline. I start to believe that the government and Fed should help guarantee loans for every Joe and Jane to buy a house in Beverly hills.

On another note, i do not understand how FHA with 3% down today is any different from Country wide at the heydays of 2005 that gave loans with 0 down???
Under any normal economics, government should support prudent and responsible behavior such as buying a house if you can afford it. If you don't have 15-20% down, you can NOT afford the house.

[LA-renter]

I for one generally support Frank's bill... or as it's described by the media. Though, I'm skeptical about the real impact of this intervention.

But I cannot fathom why limits on government-backed mortgages should be raised. Who can afford such loan amounts? Why is the government involved in this market?

The vindictive no-government-bailouts crowd on this blog is beyond tiring. The perceived benefits to loan-owners, I believe, are exaggerated.

Compared to Paulson's --and thus Bush's-- efforts, the intent of Frank's bill is more admirable. It seems to me that Paulson/Bush want to shackle loan-owner's to absurd mortgages that cannot and should not be paid. Whereas, Frank wants the lenders to share the burden, minimize dislocation and hasten a rational market.

[lefty]

hey mr. viles, by the response to the drug-house article it's time for "Weed Land"! try it ok? lol i mean the blog not the weed! something else it's time for: your new house in unrivaled metro L.A.!! don't wait, we're at or near the bottom for nicer areas! i may not have time to post after this so just do it! good luck all and enjoy the sunshine!

[John in Montana]

Thank you California Rep. Kevin McCarthy for listening to your constituents, and doing the right thing. The government should not be using tax payer money to bailout those that were irresponsible with their money. If the government bails out these people, what sort of message does that send to the rest of us? How many people who are current with their mortgages will default in order to receive government help?
Why did Reps. John Campbell (R-Irvine) and Laura Richardson (D-Long Beach) skip the vote? No courage to stand up for their convictions, or too lazy to participate?

[gary]

fine, no bailout, but no bailout fro everybody. and I dont beleive his emails are 50 to 1 for no bailout. first of all he is a republican and they cant tell the truth to save their lives and next no bailouts means, no helping banks which no republican can help themselves from doing.

[Spencer]

There are people who bought homes and lived up to their promise to pay it.

ANY sort of bail out is unfair to those people. For the most part, the people who "would be" bailed out by this plan are people who SHOULD NOT HAVE BEEN BUYING HOUSES IN THE FIRST PLACE.

I have been waiting for years, wondering how certain people in my neighborhood are affording these houses. I know what they did for a living and it didn't make sense that they could be in a $600,000 house. NOW I see how they got in there. There should be no bailout.

[smi2le]

A vote for this bill was a vote against affordable housing. I am a Democrat and I hope Bush vetoes this bill.

[Michael Snyder]

Remember when many of us took time to write to our "representatives" in Congress? I actually sent three separate letters to Senator Boxer, all generating the same form letter as a reply. Not surprising, but she's so busted. The entire text of the third letter from salutation to signature said, " bla-bla-bla" for two paragraphs. So much for representation.

[Melvin Too]

I'm all for the bailout if the government can promise to rescue me in 5 years too. I am currently buying an 800k house with 10% down and 5 year I/O ammortized over 30. As long as they are adjusting homeowners loan balance today, they should be willing to adjust mine in 5 years if I'm under water. Its a win-win situaton.

[Anthrodiva]

After eight years hating the chimp, my OWN party has succeeded in driving me into his arms...Imagine what this is doing to others.

[bigunit]

Simon's article makes reference to Miller being a land developer, so his breaking ranks with other Republicans should come as no surprise. Interesting that he voted for mortgage relief despite his constituents 50 to 1 communications against such relief. Good luck in your next election Gary.

I think the bugger is going to be in the details, since homeowners hoping to take advantage of the program must be able to document their income & pay high mortgage insurance premiums. Don't get me wrong, the provision makes sense, but it immediately excludes a significant portion of those families threatened by impending foreclosure.

Rest assured, we still haven't hit rock bottom here in LA -LA Land.

[Lou]

I don't think I've ever remembered an issue where the politicians and mainstream media did not represent at all the views of the people. I am not saying that everyone is anti-bailout but recent polls have shown that 50% of the people are, but no one seems to be representing them. Thank God for the blogesphere.

[WhyNot]

Just because you can't make a 15-20% downpayment doesn't mean you can't afford the house - I am about to graduate from law school, so I don't have the cash for a down payment - but I do have a job that will pay be 160,000/year to start (with bonuses and annual raises) why shouldn't a bank be able to give me a 0% down loan?

[arroyogrande]

"permanently raise the maximum mortgage the Federal Housing Administration can back to $729,750"

Median home price in LA County in March 2008 was $450,000. That means that half of the single family residences sold in March 2008 were below that price, and half were above.

So why do we "need" Fannie and Freddie backing loans higher than that amount in LA County? Even in The OC, the median was only $570,000.

In other words, why stop at $729,750? Why not much much more?

- arroyogrande

[Anonymous]

WhyNot --

The answer is manifold but at least starts with (1) you might lose your job, (2) you might have a health crisis, and (3) your house might lose value. The studies have consistently shown that homeowner equity is the single most determinative factor in whether a borrower repays the debt, not FICO scores, not income, not anything else. If a lender has to foreclose, the expenses in doing so are at least 20% of the value of the house, and that's why the lender should demand a large downpayment. If you had the cash, would you make such a loan with no down payment cushion? Of course not. No one who isn't likely to be bailed out by the government would ever make such a loan. This sense of entitlement borrowers feel for almost free money from lenders is astonishing.

[Laker]

WhyNot,
If you have an income of $160,000 and you just started, who knows if you are good at what you do? Maybe you will lose the job? Not that I'm saying that, but it is possible.
In a normal place, you would rent a place, live little under your means and save money for the down. With such income, you could easily save $50,000-80,000 in 1-2 years. Then you will go and buy your dream house WITH the down payment and ALSO show 1-2 years of track history of working and paychecks!

[RZ]

WhyNot: You're right that with a $160K/year job, you could certainly afford to buy a house. But getting a house with 0% down would be the equivalent of renting and getting a nice tax break on it each year. So either that tax break should be extended to all renters too, or there should be a required minimum of at least 5% down.

[lj]

you should know there were many cases of "bait and switch" that happened NOT to the poor or unsophisticated. even graduate school educated "clients" of etrade, had their hearts set on a house after a long search, only to be presented at the last minute, papers for an adjustable mortgage, while the notary stood waiting for them to sign. they had a lot invested in emotion and time and hopes dashed over these types of tactics. Some obviously bought the story "don't worry you can refinance later". Give relief to single purchasers/inhabitants who were not speculators.

[peteviles]

lefty wrote, " i may not have time to post after this so just do it! good luck all and enjoy the sunshine!"

Lefty -- I hope you're really not leaving us. We need a few optimists around here. E-mail me if you'd like at peter.viles@latimes.com.

Pete

[Ace]

Laker 'Also Peter, Can you please tell us why do we need FHA to secure loans up to $729,750? When the median price is somewhere in the $430,000-450,000 ???'

Laker, I think you have lived in LA for too long! In like 45 out of 50 states, the FHA amount is probably more than twice the median price for that state*. Why should CA be any different? If the FHA amount is the same as the median, only half of the home buyers could qualify.

*full disclosure, I didn't look that up... maybe someone will prove me wrong.

[sheila]

Why don't any of Peter's notes about this bill include the fact that there is a $7,500 tax credit (bailout) for first-time homebuyers included? Why are we only getting the negative part of the story from LA Land??

The "taxpayers" get their money back (and probably more) when the house sells, because homeowners have to kick Uncle Sam part of the proceeds (like the municipal programs). Borrowers must live in their houses (no flippers) and have to buy a lot of Mortgage Insurance. This is not a bailout as much as a refi with sensible terms and several layers of safety net under it.

The hysteria keeps getting in the way of the truth around here. Prices are already dropping. This will only help a narrow slice of borrowers who could actually afford their house if they had a normal fixed mortgage and were able to ride out the next few years while the market readjusts.

It will not deprive you of your god-given right to a super cheap house in an amazing neighborhood in a very competitive part of the world - because that right does not exist.

Many responsible, deserving people got caught in the first total credit meltdown since the Depression, and had every reason to trust that they could refi their ARMs just like responsible borrowers have been doing for 20 years. When Alan Greenspan is breezily advocating that fully-qualified borrowers take ARMs, then they do, then there is an unprecedented credit freeze, how is that speculation, irresponsibility or greed? it's closer to a natural disaster because the small slice of borrowers Frank's bill will help CAN AFFORD THEIR HOME IF THEY CAN JUST GET A DECENT FIXED MORTGAGE like the rest of us have. and they have to share the wealth with taxpayers when they sell.

People who can't afford their house will not be bailed out!! Speculators, flippers, big builders and lenders will not be bailed out!! First time homebuyers WILL BE BAILED OUT with a $7,500 tax credit, which i could easily resent since i didn't get that enormous handout from all of you when i bought, but i don't resent it because i am capable of seeing the larger picture. Read beyond the headlines and soundbytes before knee-jerk reactions. If you just look at the business section of this very paper, it is all spelled out:

http://www.latimes.com/business/la-fi-housing9-
2008may09,0,5859108.story?page=2

[Milla]

20% down just isn't realistic in expensive markets like LA. it would lock out the entire middle class from homeownership, especially families with children. i'm not saying 0% is acceptable, but 5% seems fair for LA.

and you can lose your job as a renter or owner -- no difference. you'd still have to hit the pavement and find a new job to make ends meet. it's the same as saying one should never marry if 50% of marriages end in divorce. foreclosure rates are much lower than that. the bank takes a chance on you; you take a chance on homeownership. no guarantees anywhere.

[jb]

Maxine Waters has a phone # you can call and tell the person there your displeasure with her 15B bailout. i am with others here - my democratic party has foresaken me and I am going to the dark side (vader mask noises) - gonna vote republican for the first time in 20 years of voting.

Congresswoman Maxine Waters
10124 South Broadway
Suite 1
Los Angeles, CA 90003
Phone: (323) 757-8900

[Darnell Goldberg]

Milla -- your solution to the large downpayment problem is "reduce the required percentage".

My solution is "let home prices fall until the average middle class person can afford to put down 20%"

I know, it sounds crazy, doesn't it?