Flooding along the upper Mississippi during the past few weeks has been awful. Dozens of levees have been breached, homes have been destroyed and millions of acres of farm land have been lost for the coming year.

In Washington the response has been immediate and clear: $2.7 billion in flood relief was made available for the Midwest -- in legislation that also provided $162 billion for the war in Iraq.

Skipping past the question of whether $162 billion could be better spent inside the U.S. -- or not spent at all given our mammoth federal deficit -- it took only an instant for Washington to understand that help was needed in the Midwest.

This contrasts enormously with the ongoing debate regarding help for some 500,000 American families nationwide. These are homeowners with toxic loans who could be saved from foreclosure if the FHA mortgage program is expanded.

In basic terms, the idea of FHA expansion is to allow the FHA to insure $300 billion in new mortgages. This is not a "give-away" or a "bailout" -- every loan refinanced would require lenders to take a loss. As to borrowers, they would pay both high fees plus part of any profit when they sell.

Potentially the new FHA program could result in costs to the government -- by some estimates the shortfall to save 500,000 homes would be $2.7 billion.

No one says the government is "losing" $2.7 billion to help people along the Mississippi -- that's what government is for. But to spend the same number of dollars to prevent half a million foreclosures, somehow that money is described as a "loss" and an affront to good government.

In the same way that we should want to help fellow citizens who are underwater because of failed levees, we should be equally willing to help neighbors who are financially underwater because the government failed to adequately regulate the lending system.

If this seems somehow unfair or a violation of some principle, consider this: If folks down the street are foreclosed guess what will happen to the value of your home?

For more articles by Peter G. Miller, please press here.

Published: June 25, 2008

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .