Government Debates 'Speculator' Definition In Housing Aid Programs

May 30, 2008 6:29 p.m. EST

Washington, D.C. (AHN) - A debate by U.S. policymakers on how to help homeowners has heated up over how to distinguish who should be labeled a "speculator."

Early on, policymakers used a guiding tenet that excluded anyone falling under this definition from receiving aid. The problem they are running into is, "speculator" lands in a grey area.

Most assume speculators are house flippers and multiple home buyers. However, the Bush administration and GOP lawmakers have increased the view beyond this in order to limit those eligible.

"Who's a speculator? Someone who made a mistake buying a home ... or the investors who did business with Bear Stearns and who were bailed out by the Federal Reserve?," asked House Financial Services Chairman Barney Frank.

The Bush administration has suggested those who fall behind in their payments and anyone who bought a house to reside in, expecting the home to appreciate, be deemed speculators.

This is an important issue as homeowners seeking help from the HOPE Now alliance would be shut out if given the label. Being tagged as "speculator" would also prevent them from participating in the Federal Housing Authority's refinance program currently under proposal.