Over the weekend I caught up on my Wall Street Journal reading, and Friday’s column of  “Heard on the Street – Financial Analysis and Commentary” had a title that caught my eye – “Dream Mortgage Bailout Has a Darker Side”. Hmm, I thought. What’s that all about? The column starts “It will go down as one of the biggest – and most popular – bailouts of the credit crunch. But who will pay for it later?” It explains that this mortgage bailout “serves key social and political goals: It helps shore up house prices, while the lower mortgage rates put extra money into the pockets of people who aren’t struggling to service their mortgages.”

It continues, “Most convenient of all: This mortgage buying is being done by the Fed, which doesn’t need approval from Congress for the purchases. On paper, it is a dream bailout. It benefits not just large banks but also ordinary people, it is hard for politicians to tamper with, and the Fed doesn’t have to borrow money to fund the purchases – it just prints it instead.”

The WSJ column is intended for investors who buy these securitized pools of loans. It continues, ” When something looks this good, it pays for investors to dig deeper. And the risks abound”.

But here’s the kicker for home buyers thinking of holding off their home purchase, waiting for home values to “stabilize” or go back up:

“So when it (the Fed) stops buying, mortgage rates could rise sharply”.

That’s the P.S. to my post about interest rates vs. home values from Friday!