One of the big issues right now with getting the housing market moving is the fact that many would-be home buyers can’t get home mortgage loans. The reason is that many mortgage lenders have toughened lending standards to the point where it is very difficult to qualify. It is, basically, an overreaction to the results of have lending standards that were too loose.

Heading the other direction, and making it practically impossible for most people to get home mortgage loans doesn’t really help the situation, either. But that may be changing. With the planned $700 billion bailout, stability in the market and guarantees may help encourage mortgage lenders to loosen up a bit. At least that’s the hope, reports CNN Money:

James Lockhart, the head of that agency, suggested Tuesday that mortgage finance companies Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500)
could loosen lending standards to help more homebuyers qualify for a
loan and stabilize the market. The government took control of Fannie
and Freddie earlier this month.

Another idea that could help home owners and buyers is to provide a way for current borrowers to have their loans taken over by the government. This could also loosen things up in the housing market and get the ball rolling. BloggingStocks offers this idea:

[I]nstead of buying distressed mortgages from the banks for 25 cents on
the dollar, why not offer distressed home owners the opportunity to buy
out their mortgages for 25 cents on the dollar with a guaranteed loan
from the government. Everyone wins: the cost to the taxpayers is the
same, the banks get the crap off their balance sheets and we can add a
claw back provision so that if the homes appreciate in value, Uncle Sam
gets a hefty chunk when the home is sold.

I actually really, really like it. It’s much better than bailing out the banks wholesale, and it helps nearly everyone involved — while at the same time providing a way for the government to recoup some of its costs.