I am a troubled by the idea of using $1.5B apnews.myway.com/article/20100219/D9DV7S... to save homes instead of create jobs. Arizona, California, Florida, Michigan and Nevada are states where consumers over leveraged just like Banks. Homeowners could take-out equity up to 125% of the fair market value of their home in most of the states and at one point most borrowers/homeowner's did. Now they are upset that their home is not worth what they owe. They spent the proceeds from the equity loan though.
I think if we are going to bail them out we need to put limits in place such as Texas has. In Texas you can not take-out equity in excess of 80% of the fair market value of your primary home - excluding investment properties. This protects the real estate market and consumer. Our real estate market has almost remained in tact.
I can not help but think that this is a vote buying venture at tax payer expense. I also believe that these states real estate markets are not too big to fail unless they are willing to create measures to avoid this in the future such as an 80% equity cap. If the banks will not submit to regulations then the states can and should implement their own.
The values were over inflated in those markets and needed to correct. When you pay a $1,000 per square foot for a shack in California there needs to be some correction.