I don't see how you can spin this any other way than as a subsidy for the well-off. The way this program used to be run was that the maximum size of a conforming mortgage varied depending upon where you lived. In most places, i believe it was $417k, but in high cost areas like the northeast and california, it was $729k. Now these days, you pretty much have to have a 20% downpayment to get a loan, so we are talking close to million dollar houses. The effect of it is to lower the interest rates buyers would pay somewhat, perhaps 25-50 bps. There is no direct cost to the government, but as someone else noted, it potentially puts FNM/FRE on the hook for more bad loans. Since they are already bankrupt and will end up costing taxpayers>1 trillion to clean up, one might question why we are getting more exposure. We have seen that both entities will be run as slush funds for democrats and the top execs will be political hacks installed by congress. Not one of the last crew at FNM, who ran fraudulent books to justify huge options awards, has been prosecuted or even forced to return their bonuses. Now congress is apparently out to show that they learned nothing from the previous crisis. The only sensible policy would be to close these entities as quickly as possible anf get government out of housing finance. That is a policy most republicans support, but democrats are adamantly against it. They love being in a position to use taxpayers money to decide how credit gets allocated. History has proved time and again that any time government is involved in extedning credit, laon guarantees, etc, there will be fraud, corruption and massive waste of taxpayer funds. We got it with the housing crisis, we got it with Solyndra and we will continue to get it.
The sooner the housing market can find the bottom the quicker more investment will enter the housing market. The foreclosures and evictions need to happen now. At least get the title into strong hands and if the Government wants to subsidize the new rents payments so the current family can find other housing arrangements, that's fine.
And in the meantime the market's serving up opportunities the likes of which we haven't seen since early 2009.