Report stirs questions about whether Congress can justify proposed bailout

By JENNIFER ROBISON
LAS VEGAS REVIEW-JOURNAL
A new study shows the number of homeowners falling behind on first mortgages for their own residences makes up a relatively small share of the nation's ailing lending market.

The report, from Ohio State University, suggests total losses on mortgages for primary residences could range from $90 billion to $180 billion. A large amount, but not catastrophic, said study co-author Randall Olsen, a professor of economics and director of the Center for Human Resource Research at Ohio State.

Olsen's bad-mortgage tally is also a good deal less than the $700 billion bailout Congress is supposed to consider today.

The biggest losses will instead rest on commercial real estate loans and loans on homes bought as investments or built on speculation, without buyers lined up.

"When we look at how homeowners have managed their finances, especially with respect to their homes, they've been a lot more conservative and careful than a lot of financial institutions and investors have been," he said. "Do we really want to tell financial institutions that if they write really shaky loans, we're going to save them? Do we really want to tell investors, 'Gee whiz, go ahead and buy a house hoping to make a killing, and when things go badly, we'll keep you from being foreclosed on?' "