Barney Frank wants the FHA to bail out failed flippers and mortgage fraudsters. Problem? The FHA thinks that's a really f*cking stupid idea.

Monkeys I tell ya. Monkeys.

You'd think Barney and the FHA would have had a little chat before he put together his housing bailout turd.

But that would be competent.

Thanks to Luke over at USNews for the tip. And thanks to Barney Frank for showing us just how well-deserved Congress' record-low approval rating is.

FHA Chief Criticizes Rescue Plan

While most government officials scratch and claw for more authority, Federal Housing Administration Commissioner Brian Montgomery is pouring cold water on a housing rescue plan that would make his agency the linchpin of an expanded federal effort to keep people in their homes.

The House of Representatives last week passed a bill championed by House Financial Services Chairman Barney Frank that would enable struggling borrowers to refinance into more affordable loans guaranteed by the government. The legislation would require a significant expansion of the FHA—an idea recently endorsed by Federal Reserve Chief Ben Bernanke.

But speaking to a roomful of real estate agents this morning at the National Association of Realtors Midyear Legislative Meetings and Trade Expo, Montgomery expressed his opposition to the legislation recently passed by the House:

"As one colleague described it, it is "on steroids" because it throws sound underwriting out the window.

"It moves us toward a federalization of the mortgage market, forces taxpayers to pay for bad loans, and doubles FHA's portfolio, adding hundreds of thousands of risky loans in a Byzantine process that will take years to sort out and create a regulatory nightmare."

Housing nightmare: Your home is crashing in value, you lost your mortgage broker job, you can't refinance, and you've maxed out your home equity loan

So what is the "Ultimate Great Housing Crash Nightmare Scenario"?

You just know there are a millions and millions of people who made really bad decisions these past few years, who are regretting them now. Kent and Mysti from the other day were a good example, but there's many more out there even worse off than that.

So what's the worst it can be?

My take - anyone who's housing screwed can just walk away. Turn in the keys. Go rent. Find a new job. It's just money, it wasn't your house anyway, and there are more important things in life.

And next time, don't listen to anyone on commission. They'll screw you every time.

FLASH: Toxic lender Washington Mutual sees "perfect storm" in housing, expects home prices to keep falling in most markets, billions in WM losses

The perfect storm. Surprising for bank CEOs and sheeple. Fully expected and predicted by HP'ers. Note - I'm short WM... They did call them "liar's loans" for a reason ya know...

NEW YORK, Sept 10 (Reuters) - Washington Mutual Inc., the largest U.S. savings and loan, may set aside $500 million more than it had previously forecast for loan losses in 2007, amid what Chief Executive Kerry Killinger called a "near perfect storm" in U.S. housing.

The Seattle-based thrift had in July projected setting aside $1.5 billion to $1.7 billion for loan losses.

Speaking at a Lehman Brothers Inc. financial services conference, Killinger said the housing market is struggling with stagnant home prices, rising borrowing costs, tighter underwriting standards, and tough capital markets conditions.

"Most housing markets appear to be weakening, to us," he said. "We would not be surprised to see declines in housing prices in many regions of the country ... for the next few quarters."

Think you're safe putting your cash into money market funds? Think again - they're CDO mortgage investors, and they ain't FDIC insured

The biggest problem with the CDO con-game is that S&P and Moody's hilariously gave this toxic loan cancer AAA or investment grade ratings, so "safe" funds (money markets, pensions, etc) could barrel in.

Oops.

"Cash is King" means one thing. But damn, if cash isn't safe (goodbye dollar) and money markets aren't safe (hello subprime), every asset class is being liquidated to raise cash, and even gold is dropping (hedge fund selling to pay debt) then it's getting tougher and tougher to find safety. Watch the US T-bills be the last island, which in itself is kinda funny since we're $50 trillion in the hole and essentially bankrupt.

Amazing. Good luck out there.

Aug. 20 (Bloomberg) -- Money market funds were invented 37 years ago to offer investors better returns than bank savings accounts while providing a high degree of safety. Most of the $2.5 trillion sitting in these funds is invested in such assets as U.S. Treasury bills, certificates of deposit and short-term commercial debt.

Unlike bank accounts, money market funds aren't insured by the federal government. They almost never fail.

Unbeknownst to most investors, some of the largest money market funds today are putting part of their cash into one of the riskiest debt investments in the world: collateralized debt obligations backed by subprime mortgage loans.

Under SEC rules, money market managers must invest in securities with ``minimal credit risks.'' Joseph Mason, a finance professor at Drexel University in Philadelphia and a former economist at the U.S. Treasury Department, says subprime debt in money market funds is far from safe.

``This creates tremendous risk for today's money market investors,'' says Mason, who wrote an 84-page report on CDOs this year. ``Right now, I'm not comfortable investing anything in CDOs.''

FLASH: And then the hedge funds kept imploding. And imploding. And imploding. Bear Stearns nukes the market (again)

Come on now, you can't be serious! Bear Stearns is the gift that keeps on giving, but the thing is, they're just the tip of the iceberg. Thousands of hedge funds, pension funds and foreign countries will now implode as the CDO-uber-leveraged US housing market melts down.

Just turn in the keys and walk away Jim Cramer says. And that's exactly what folks are doing.

Tilt. Head for the hills. This sucker is gonna blow. Err, make that "blowing", active tense.

Bear Stearns Halts Redemptions on Third Hedge Fund

July 31 (Bloomberg) -- Bear Stearns Cos., manager of two hedge funds that collapsed last month, halted redemptions from a third fund after a slump in credit markets prompted investors to demand their money back.

The Bear Stearns Asset-Backed Securities Fund had about $900 million invested in asset-backed securities, including mortgage bonds, spokesman Russell Sherman said today in a telephone interview. The fund was overwhelmed by redemption requests, Sherman said.

The fund's stumble is a setback for New York-based Bear Stearns and illustrates how the crisis in the subprime mortgage market has spread. The fund had less than 0.5 percent of its assets in securities linked to loans to subprime borrowers, Sherman said. The two funds that collapsed invested almost fully in subprime bonds. Losses have spread to banks, insurers and hedge funds in France and Australia, including one run by Macquarie Bank Ltd.

``This shows you don't necessarily have to be a subprime fund now to be having problems,'' said Bryan Whalen, a portfolio manager in Los Angeles at Metropolitan West Asset Management, which oversees more than $21 billion in fixed-income assets.