From what I can tell, this law isn’t targeted at sub-prime mortgages or what’s considered the risking portion of the mortgage industry. This law is targeted at non-conforming mortgages to individuals that were eligible for prime interest rates. It’s applicable to the entire mortgage industry.

We keep pounding on “sub-prime! sub-prime!” but the law is aimed at preempt a meltdown for the entire industry. Basically, it looks like we’re only at the tip of the iceberg.

You’re totally right. The government doesn’t really care about the average citizen. This bailout is designed for the banks and lenders not citizens. If it cared more about the citizens it would create a plan that benefited the home owners and not the lenders.

I’m not sure that it’s a “new” interpretation, rather it’s a question that hadn’t been asked. I don’t think this interpretation changes an existing interpretation, as much as it clarifies an unclear portion of the rules.

No matter how you slice it, the rules are being changed midway through the game and someone will clearly benefit. How can you be so sure there isn’t someone losing too?

If anything, it’s “bailout” of lenders rather than borrowers. The reason I said it wasn’t a bailout is that it’s the borrowers that everyone is mad about, because this is seen as a giveaway to them.

At the same time, it’s not really a “bailout” of the lenders, because the feds aren’t actually giving them money, loans, etc to prop them up. All they’re really doing is giving them legal cover to do something that might have been a legal gray area previously. I don’t really see that as a bailout, in the traditional sense of the term. It’s more of a “deregulation”, which is still a misnomer because the regulation hasn’t changed, there’s only been a wider interpretation of it by the regulators.

This isn’t a giveaway to borrowers.
This isn’t a violation of investors’ contracts with lenders.
This isn’t costing the taxpayer money.

So there is no “seen” bailout, but I don’t see how you can say this…

But this isn’t really all about helping borrowers, it’s about letting lenders find a way out of this mess without going belly-up.

…without there being some sort of “unseen” bailout.