Posted on 11/05/2009 8:12:38 AM PST by FromLori
WTF is this?
Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.
The government-controlled company, through its new "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.
This has exactly nothing to do with helping "homeowners."
It is entirely about Fannie not having to recognize the written-down value of these houses - that is, allowing them to hold the "mark" on the loan at it's original value, rather than recognize the loss.
The rental program is designed to help homeowners who don't qualify for a loan modification under the Obama administration's plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.
Fannie won't sell the properties because then they would have to recognize the mark.
This is nothing other than yet another scam to avoid recognition of bad paper Fannie took on their books and has a HUGE embedded loss.
To qualify, homeowners have to live in the home as their primary residence and prove that they can afford the market rent, which would be determined by the management company. The rent can't be more than 31 percent of their pretax income.
Oh, so the rent can't be more than 31% of their pretax income, but the original note's payment was, right? After all, if it wasn't then the homeowner wouldn't have been in foreclosure in the first place!
That's the key paragraph, and tells you that:
This is simply an attempt to avoid mark-to-market on the properties.
The rent charged will be insufficient to meet the PITI (Principal, Interest, Taxes and Insurance) on the original note, as by definition if it could the "homeowner" wouldn't have defaulted in the first place! This is yet another scam folks, all courtesy of our government who will do anything to avoid admitting the extent of the liabilities that are now in Fannie and Freddie's portfolio (and by extension, partially in The Federal Reserve as well!)
But the economy is getting better, right?
That's why we keep seeing scheme after scheme, scam after scam, all intended to do one and only thing - avoid a true and accurate accounting of losses that have already occurred.
And the market roars - it spiked a full 1% on this announcement - on yet more government-sanctioned and legalized fraud.
IF the economy was truthfully improving we wouldn't need any of these schemes. Honest profits would be sufficient to both support the housing and stock market. The fact is those honest profits simply do not exist, and neither does the value of these "assets" support the loans outstanding against them.
IF the government gave a damn about these homeowners they would instead reset the loan to the discounted cash amount of that market rent and re-write the loan at that same 31% of the homeowner's income. Of course that would force recognition of the fact that the property isn't worth anywhere near what the loan balance is, and thus force Fraudie and Phoney to EAT the bad paper they're holding.
Scam scam scam scam scam - it's all good for the banks and oligarchs, while the average American is dispossessed of his house!
“prove that they can afford the market rent, which would be determined by the management company”
WHAT management company? Is the federal government now a “manangement company”? Haven’t they screwed up the housing market enough as it is?
Also, the fact that they get to decide if you get to stay in your house after a year is a bit scary. Who decides that and what is the specific criteria?
“The rent can’t be more than 31 percent of their pretax income.”
31% of $0.00 pertax (on the record)income is what? Wonderful, why work, sure beats the Rescue Mission!
But in health-care, the ‘govt option’ will be on a ‘level playing field’. Govt changes the rules at will...
Quack, waddle... feudalism.
“COMMERCE BETWEEN MASTER AND SLAVE IS DESPOTISM”
—Thomas Jefferson
Hmmmm...rentals without landlords. I don’t need a crystal ball to see how this one is going to turn out.
Denniger is on top of all this, he gets it!!!
But, but, but...think of all the jobs this will create. After all, the "tenants" can't be expected to pay for or perform the upkeep, that will be the duty of the "landlord."
This is one plan I am in favor of.
If we have 10% unemployment, then 1:10 homes will likely foreclose. I’d rather have a home occupied by the owner who is TEMPORARILY out of work, than have empty homes driving property homes even lower.
Some time or another, the homeowner will again be employed; and will resume’ paying his mortgage. Getting laid off is rarely the fault of the homeowner; yet he bears 100% of the punishment of decisions made by upper managment.
Would you rather have a person declare bankrupcy, be homeless and have a vacant house drive property values down; or would you rather have the person ‘rent’ his home for a year, and eventually get back on his feet.
Face it, people who are consistently on welfare do not typically purchase a home - as they never have the funds necessary. However, any program that keeps my neighbor who lost his job, in his home, while he struggles to return to work is a program I am solidly behind. There, but for the grace of God, go I.
Is there a way to look up welfare payments? We could then figure out how much we have to pay for them to stay in the houses they could not afford in the first place. No I guess that wouldn’t work either I think they get more money depending on how many pop outs so I suppose it would have to be figured on a case by case basis how much we have to pay. And lets not forget all the bailout money we are stuck with for the banks we would have to include that figure too.
Well that is not exactly true since the government through Acorn lawsuits, etc. give the loans to people who had NO business ever owning a home since they did not qualify in the first place. Ever hear of liars loans?
Then there were the people who over bought big shots until one paycheck is gone why should I have to subsidize them?
This helps the banks and a lot of those types of people and screws the taxpayers.
Sorry but I am sick of paying for all this crap whether it be for the banks or Joe Blow.
My husband was laid off on Monday and he has been at his current job for 37 years. We are not expecting a hand out from anyone but we should not keep being forced to give hand outs to the banks or these people who had no business buying homes they could not afford.
Properties have fallen in value in the past. They did in the early 1980’s as a matter of fact. The home we had then we could not have sold for years without a loss. We did not sell it until 2006 right before the crash we almost waited too long but it is not like anyone with half a brain could not figure out this was an unsustainable course of action.
So big deal housing will still fall even with all of this but what are you buying a home for a place to live or an investment and if it is an investment that is what happens in the real world sometimes you win and sometimes you lose but it should be up to the individual and the banks to realize the losses not the rest of us since we do not get to realize the profits when they win now do we?
Obamavilles - right, like Hoovervilles
Good one lol
Actually I'd rather have a Federal Government that respects the Constitution. Maybe that's just me.
STEALTH REPARATIONS PART III
Coming soon to your neighborhood.
How soon before there is an “Unpaid Rent Forgiveness Plan” financed by the billions in Stimulus Plan money Obama keeps as his personal slush fund?
“Would you rather have a person declare bankrupcy, be homeless and have a vacant house drive property values down; or would you rather have the person ‘rent’ his home for a year, and eventually get back on his feet.
Actually I’d rather have a Federal Government that respects the Constitution. Maybe that’s just me. “
The government should foreclose, and resell to a private party. This justs shifts the debt to US.
I think the person writing this article misunderstands the sentence “The rent can’t be more than 31 percent of their pretax income.”
This is pretty common in property management, it means that if the rent would be more than 31% of their income, they wouldn’t qualify for the plan, not that the rent would just be automatically lowered to 31% of whatever their income is.
Normally I would agree, but the fed rent program may be the 31% of whatever their income is. Fact is, if they can’t afford the mortgage, they probably can’t afford a normal rent either. Plus, who is going to maintain the home? How is the government ever going to sell the home with the previous owners as occupants? Problems, problems, problems.
This should be called “section 8 for home debtors”.
If we had free enterprise, which we don't - then you may have a point. What we do have is the Gov't meddling in every aspect of business. I've seen plants close, jobs shipped over-seas, companies fail - all because of Gov't meddling with free enterprise. When we have OUR Gov't giving tax incentives to companies like Dell to ship jobs to India; that results in 8,000 families to lose their homes back here in America. Are these bad people? Are they stupid? Lazy? Inept? No, no and no!
If you bankdrupt them, are we all better off? If you take away their retirement, are they better off? No, now we have a vacant house that is auctioned to the highest bidder - so instead of getting a neighbor, you end up getting a rental home bought at a level well below the value of the home. (oh, that will do wonders to the neighborhood, won't it?). I'm sure you've seen this, a house is sold as an 'investment property' instead of a home for a family to live in, join the community and take pride that home ownership brings.
Whereas, if we just wait a little while for this family to find another job; you keep a neighbor who has an investment in his home - property values for everyone around them remain at 'market levels' (depressed as they are at the moment); and the person has not declared bankruptcy.
It's a game of risk; we either take a bullet to the head with absolute certainty today; or we hope that no trigger gets pulled at all tomorrow.
So, your spouse comes home today saying he's been laid off. 2 months go by, debt piling up as Unemployment only pays for the most basics of life. Your retirement is now gone - plus you get a 15% penalty for daring to spend your money due to losing your job. You face bankruptcy and losing your home. You begin talking to the bank, exploring your bankrupcy options.
Then, your spouse finds another job; but it pays 20% less than what he was making. You are looking for another job to help get ahead - you are the same person, you haven't lost your skills - but the job market is saturated with other folks who lost their jobs as well, so competition is fierce, and you are lucky to have a job now at all. Nonetheless, for the meanwhile, you are making 20% less and have accumulated a load of debt while you were unemployed.
So, do you declare bankrupcy, lose your home and all of your possessions and hope to be able to scrap enough cash to get into an apartment; or would a TEMPORARY relief of paying rent on your home until you get a second job, or find a job that paid what your origional job paid?
It's an easy choice. Take a bullet to the head with absolute certainty today; or hope that your industry, hard work and efforts will enable you to recover within a year. If you still haven't recovered in a year; you will still end up with a bankdrupcy. Given a choice, I'll take my chances and pay rent on my home.
BTW, who takes better care of a home? An owner or a renter? An owner who pays rent is still hoping to continue living there for years to come - where a renter simply uses a home and moves on.
While I do not disagree wtih your statement, would you rather have bankrupcies and have 100 vacant homes; or 99 bankrupcies and vacant homes.
If someone is gonna fail; and they give up or can't catch a break - they are going to fail. But, I think there are more than 1% of the people who are in a heap o'trouble today, that are desperately trying to find work - and can be successful if only given enough time to recover.
Yup, been there myself; have several neighbors in that situation today. Of these neighbors, I do not want them getting a free 'taxpayer' financed home; however I have no issue with them getting 1 year of 'grace' and then refinancing their home when they get a job and are back on their feet again.
These are horrible times, and generating new jobs is the only real solution. If this economy doesn’t improves soon we
are all going to be homeless, with or without this program.
Good luck to you.
I appreciate that. I got laid off in June without notice; and was lucky enough to find a new job (15% less pay) in just over 6 weeks. I don’t need the help now .... but I have neighbors whom I pray for. They may not be as lucky as I have been.
I don’t know any hard working, taxpayer who has his hand out; I despise a hand out. However, we all need a hand-up some time in our life. This sounds more like a hand-up; rather than the typcial Gov’t hand-out.
Well it is better conceived that Cap & Trade or Healthcare
that’s for sure.
“I’ve seen plants close, jobs shipped over-seas, companies fail - all because of Gov’t meddling with free enterprise.”
Amen to that!
“Whereas, if we just wait a little while for this family to find another job; you keep a neighbor who has an investment in his home - property values for everyone around them remain at ‘market levels’ (depressed as they are at the moment); and the person has not declared bankruptcy.”
I’ll sign onto that in a heartbeat, but is the govt. offering this? Or are they “snatching” the house, and turning them into renters of their former home? It makes one helluva difference.
That was my intrepretation of the article. If the family who bought the home cannot make their mortgage; rather than have them declare bankdrupcy and turn the home into the bank (and be homeless); they can pay up to 31% of whatever income they have - and essentially 'rent' their home from the banks. This is a temperary 'fix' that lasts up to 1 year.
I assume (I do not know for sure) that when the family gets another job, they resume payments on their home. I would think that the term of their loan would extend from 30 to 31 years.
Unless the only job he can get is in another city or state.
And, does the interest on the loan continue to accrue or is this treated as a new loan with his now lousy credit rating?
No matter how you slice it, the taxpayer will get screwed - especially when, not if, housing doesn't recover for the next 10 years or so. Actions like these only prolong the problem and I suspect discussions like this will still be on the boards 5-10 years from now as yet another strong-as-spaghetti prop is put under the housing market.
“Unless the only job he can get is in another city or state.
And, does the interest on the loan continue to accrue or is this treated as a new loan with his now lousy credit rating?
No matter how you slice it, the taxpayer will get screwed - especially when, not if, housing doesn't recover for the next 10 years or so. Actions like these only prolong the problem and I suspect discussions like this will still be on the boards 5-10 years from now as yet another strong-as-spaghetti prop is put under the housing market.”
OK - then please let us hard-working people that have been paying taxes that have homes we bought over 15 years ago, paid on time - every time, have student loans because we were given the dream of higher education = better pay and prosperity - then lost our jobs and can't find one that will pay $8 hour.
I'm so happy our gov’t collected tax dollars and worked with millionaire Bono who came to this country and promoted forgiving the debt of African countries from the US a few years ago.
Didn't seem to have much outrage then? Now when our own people are having a difficult period due to the bad decisions and tax incentives allowed to the Wall Street scumbags to collect billions in profits and bonuses - you kick out the working class that has moved this country forward - all of a sudden kick them to the curb - they are useless now.
All you seem to care about is one's lousy credit rating and accumulating interest on the loan. The 0 percent disappearing loans given to the banks don't seem to be addressed anywhere in this commentary. YOU can slice it anyway you want - I slice it this way, there was no real slice for the working or middle class, and now there is no working or middle class.
Hope to be around in 5-10 years to rehash this discussion, but my optimism seems to be waning rather quickly. Sweet dreams my friend, hope to see you at the next U2 concert with a miller lite you paid $9 for and the $125 charge per ticket you bought from Ticketmaster along with the additional $15 parking fee you weren't told about prior to the show....
Dude, I sympathize Big Time with folks in that position and am mightily pist off at the politicians who are complicit in this disaster. The America I knew and grew up with has been evaporating for a long time and has now come to a head. I am not condemming you or them, just the idiotic "kick the can down the road" approach the govt. is using ("Fannie Mae is not planning to market the homes for sale during the one-year rental period." After that you could get booted at any time.)
That the homeowner may be aided, short term, by this tactic is a side effect - the main intent was to save the banks, and then their own behinds. I mentioned "short term" because it is only a temporary relief. The homeowner who uses this option is now tied to the area, where jobs may have evaporated. At best, it gives him a breathing spell while he tries to get a job SOMEWHERE and if needs be, walks away from the house.
(snip) All you seem to care about is one's lousy credit rating and accumulating interest on the loan.
Not at all. I was pointing out that what appeared to be a good deal on the surface had the potential of putting the homeowner deeper under water. Given the way this government is handling the economy, there will be no recovery and that distressed homeowner will have to walk anyway from a larger amount. That the taxpayers get screwed is a given in any scenario.
The 0 percent disappearing loans given to the banks don't seem to be addressed anywhere in this commentary. YOU can slice it anyway you want - I slice it this way, there was no real slice for the working or middle class, and now there is no working or middle class.
No argument there - the rape of the middle class is in full swing.
Hope to be around in 5-10 years to rehash this discussion, but my optimism seems to be waning rather quickly.
Hope I'm around too - I'm 76 :-( -- My optimism started to wane when even the Pubbies joined in the gang rape.
Sweet dreams my friend, . . .
Same to you, in the true sense of the word.
. . . hope to see you at the next U2 concert with a miller lite you paid $9 for and the $125 charge per ticket you bought from Ticketmaster along with the additional $15 parking fee you weren't told about prior to the show.
Dunno where that one came from as I didn't defend any of those tactics - and I don't like those damned concerts anyway :-). Good luck.
“I assume (I do not know for sure) that when the family gets another job, they resume payments on their home. I would think that the term of their loan would extend from 30 to 31 years. “
There are lenders who have been doing this for years. They roll the past due payments into the back of the loan, if someone loses their job. This is an excellent no lose situation.
>The 0 percent disappearing loans given to the banks don’t >seem to be addressed anywhere in this commentary. YOU can >slice it anyway you want - I slice it this way, there was >no real slice for the working or middle class, and now >there is no working or middle class.
“No argument there - the rape of the middle class is in full swing.”
Ok - I’m glad we have some context associated with this discussion.
>Hope to be around in 5-10 years to rehash this discussion, >but my optimism seems to be waning rather quickly.
“Hope I’m around too - I’m 76 :-( — My optimism started to wane when even the Pubbies joined in the gang rape.”
So let me just say you are a couple of years younger than my mom who worked hard during my high school and college years making $7 hour - never took a sick day or any vacation for those 8 years so we could pay rent and I could work on my Bachelor’s degree. She is now 79 years old - I have and will support her anyway I can and I am willing to take a bullet for her. I respect you for lasting this long in our morally corrupt and deteriorating country.
>Sweet dreams my friend, . . .
“Same to you, in the true sense of the word.”
Let’s hope we can all do this once in a while - I can’t remember the last time I had a sweet dream.
>. . . hope to see you at the next U2 concert with a miller >lite you paid $9 for and the $125 charge per ticket you >bought from Ticketmaster along with the additional $15 >parking fee you weren’t told about prior to the show.
“Dunno where that one came from as I didn’t defend any of those tactics - and I don’t like those damned concerts anyway :-). Good luck”
Knowing you are older than me I have to obviously respect the fact that this reference was not something your hard working, selfless generation would need to know - so my apologies.
This came about with my comment associated with Bono who is a band leader for a billion dollar band named U2 that touched people from my generation during the 80’s and 90’s, under the guise of “revolution” while they swelled their bank accounts.
People bought into this because they felt they too were rebels. When my generation got a little older and started working their ass off making 100k a year - they had no problem spending $400 to go to a U2 concert, hiring a babysitter for their kids so they could relive the “revolution” days.
In the mean time Bono quietly worked with the US Congress both Rep and Dems and strong armed them into relieving third world debt, while he comfortably lived in his mansion.
Here is an excerpt from Wikipedia about how great this man is:
“Since 1999, Bono has become increasingly involved in campaigning for third-world debt relief and raising awareness of the plight of Africa, including the AIDS pandemic. In the past decade Bono has met with several influential politicians, including former United States President George W. Bush and Canadian Prime Minister Paul Martin.[77] During a March 2002 visit to the White House, after President Bush unveiled a $5 billion aid package, he accompanied the President for a speech on the White House lawn where he stated, “This is an important first step, and a serious and impressive new level of commitment. ... This must happen urgently, because this is a crisis.”[77] In May of that year, Bono took US Treasury Secretary Paul H. O’Neill on a four-country tour of Africa. In contrast, in 2005, Bono spoke on CBC Radio, alleging then Prime Minister Martin was being slow about increasing Canada’s foreign aid.[78] He was a nominee for the Nobel Peace Prize in 2003, 2005, and 2006 for his philanthropy.[15][79][80]”
Where is the govt and Bono now that the American worker is in crisis?
Hopefully this puts thing into context. When times are good these millionaires/billionaires will fool the people into a guilt trip to part with their hard earned money. When the same trough they were feeding from dries up, they quietly disappear and hide in their mansions.
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