Dennis Cardoza (D-CA), What are you THINKING?

So today I am out doing my research and come across information that there is a bill floating around (The Home Act: HR 6218) proposed by Representative Dennis Cardoza of California (D) to bring back some of the extremely loose lending practices that got us into the financial mess a few years back.
Dennis is proposing to have a No Documentation, No Credit, No Appraisal re-fi program available for people who currently have government backed (Fannie and Freddie) loans to allow them to re-finance into a fixed program at today’s rates.  Wait a second…did we all read this right…NO documentation or credit needed?  Isn’t that what got us into this mess in the first place?  Lending to people who didn’t have the income or the credit to afford the homes?  Mr. Cardoza *THWACK* that’s me trying to smack some sense into you!
First, Fannie and Freddie already have a rate relief program in place to refinance people up to 125% of their home’s current value.  It requires some documentation to make sure they aren’t delinquent and about to be foreclosed on (though even here exceptions are made if they can afford the reduced payment but not the current payment) but is generally pretty easy to get through, according to my wife who is a mortgage processor. 
Next, if we aren’t checking these people out to make sure they can afford the new payments we are just delaying the inevitable foreclosure that will STILL happen, even with this refinance.  Why waste people’s time doing something that won’t actually do a darn thing? 

To be honest, I would whole heartedly support this if it were changed in one little way, requiring a certain basic standard for income and credit, but waive the appraisal on the home (maybe also make it available for FHA/VA since they don’t have a rate relief program available now like Fannie and Freddie already do).  In THIS format we would only be modifying the loans for people that would be able to keep their homes at this reduced rate.  They could free up a little extra of their income to go back into the economy in other spending.  It would also lower the rate of strategic foreclosures (where people walk away from homes they are underwater on and cannot reduce rates on), as these people may decide at today’s rates their home is still an investment worth keeping over time. 

Instead, we get this…redundant, un-neccessary, and ill conceived idea to fix our mortgage woes.  If this is what got us in trouble (sub-prime no doc lending) how is it going to be what gets us out of trouble, Mr. Cardoza?  It won’t but it sure does make you look insane (Insanity: Doing the same thing over and over and expecting a different result despite getting the same results every time). 

Thanks for reading, you can find the source bill I am discussing at Htt p://cardoza.house.gov/uploads/The%20HOME%20ACT.pdf.  See you tomorrow and Keep Dreaming!