Given the local nature of housing markets, state and local solutions can be particularly effective. Current law allows states and localities to issue tax-exempt bonds only to assist first time homebuyers or homebuyers in designated distressed areas. Some states' housing agencies have initiated pilot programs, backed by taxable bonds, to help refinance struggling subprime borrowers into more affordable mortgages.
Today, we are proposing to allow state and local governments to temporarily broaden their tax-exempt bond programs to include mortgage refinancings; if enacted, this will reduce the cost of innovative mortgage programs and allow these programs to reach more struggling homeowners.
My interpretation of how this was covered on CNBC wasn't really correct. I had thought they were talking about mortgage-backed securities and not municipal bonds. I don't have an opinion on whether or not this is a good idea, but it isn't a direct bailout of big shitpile.