Policymakers are rushing to pass an economic stimulus package driven in part by concerns with the mortgage market. The proposal would cut personal and business taxes, but also increase significantly the limits on federal housing administration mortgage loans and the loan portfolios of Fannie Mae and Freddie Mac. Some warn those increases could leave taxpayers on the hook for risky mortgage loans.
According to Pete Sepp, Vice President of Policy and Communications at the National Taxpayers Union, "The more loans FHA takes on from the private sector and backs with government money, the more risk there is to taxpayers of having to make good on those debts. By making good, that means a lot of money taken out of taxpayers pockets."
A recent Harris Interactive poll found 66 percent of respondents believe proposals that increase the size of the mortgage loans federal agencies ensure and purchase are "nothing more than a taxpayer-funded bailout of banks and lenders that provided and profited from these risky loans," said Sepp.