Carpe Diem has a great table that tells you everything you need to know about mortgage politics in Washington, especially why an initiative that would have been a slam dunk in a previous era today is anything but certain.  It’s actually very basic: homeowners either with no mortgage, a prime fixed rate mortgage, a prime adjustable rate mortgage total, or a VA/FHA mortgage total are more than 91% of all homeowners.  Those with subprime adjustable rate mortgages equal less than 5% of all borrowers.  In other words, the program announced by the Bush administration last will do nothing for the overwhelming number of homeowners, and they aren’t happy about the other 4.4 percent getting a break.

It’s no wonder, therefore, that the Bush program doesn’t require legislative approval.  With supporters of those the program is designed to help thinking it doesn’t go far enough and supporters of those who don’t think they benefit from the initiative thinking it shouldn’t happen at all, it’s very likely the program wouldn’t be approved if it had to be voted on.

Two things have to happen for the program to be anything other than a political nightmare for all concerned.  

First, and most important, the 95 percent who won’t benefit directly have to be made to understand that they will benefit at least indirectly because home prices in their neighborhood won’t fall as much, the inventory of homes for sale will be lower, financial markets will be more stable, etc.

Second, those who do benefit directly from the program may also have to have some additional cost imposed on them that everyone else thinks is a fair trade.