Posted on 08/05/2010 6:39:02 AM PDT by Daisyjane69
Edited on 08/05/2010 6:53:02 AM PDT by Admin Moderator. [history]
James Pethokoukis hears rumors of an August surprise coming from the White House, one that will attempt to win backs the hearts and minds of voters dismayed at the failing economic policies of the Obama administration. With the government fully in control of Fannie Mae and Freddie Mac, Barack Obama may issue an order to forgive portions of underwater mortgages processed through the GSEs, where negative equity approaches $800 billion overall. Some financial houses have begun quietly preparing for the possibility:
Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.
The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. …
P.S. to post # 94. The article clearly states they will be using HARP.
* Home must be owner occupied
* Property can be 1 to 4 units for a primary residence
* Current mortgage loan must be owned Fannie Mae or Freddie Mac
* Mortgage must be paid current and up-to-date
* Loan-to-value (LTV) can be no more than 125%
HARP
This is only appealing to subprimers who could not turn in their paperwork last time.
It is a desperate last ditch effort to buy some democratic votes.
The people applying will see HOPE until after the election and they are told they don’t qualify (or failed to send in all the required documents)
Yes, WE have!
WAY too much of a generalization! I know people underwater who were paying their mortgages like clockwork, but due to job changes have been cut way back. Not their fault they bought their home when they did. It was a new house.
The price is always right when you’re spending someone else’s money..............
Well in my case when we refinanced that is EXACTLY what we did, all new windows, insulation, the whole enchilada. Ia m in the business of energy efficiency and it still makes no difference at the end of the day as the only payback I have gotten is lower energy costs. When it comes to resale value I am at the mercy of the comps in the area, and when there are more homes than buyers the value depreciates, simple supply and demand. So all of the melodramatic crap about toys and trips holds no value for me. Put yourself in the shoes of someone caught up in an economic downturn that drives them, not the other way around. My car is 11 years old, my wife’s going on 6, no jet skis, no surgery, no trips to Disneyland or the like.
The problem starts and ends in Government not in your neighbors yard. Ronald Reagan understood that our income is ours, not s piggy bank for them to take and give away or spend to buy votes. The battle is there not in mainstream America and as long as the people vote these turkeys in to power then we have no one to blame but ourselves.
We have met the enemy and they are us!
I bought at the height of the market in 2006. Fully qualified for my mortgage. Still employed, with raises and bonuses. Still making payments on my mortgage. In fact, paying extra on my mortgage to bring down the principal faster. But I’m still underwater because of the housing collapse due more to Government than banks, and through no fault of my own.
I’d have my in-laws screaming at me again if I turned down something like this, which I am still highly inclined to turn down. They already gave me some grief for not taking advantage of the mortgage re-fi programs Obama instituted.
I guess it depends on how its done if I have a choice or not. I’d much prefer for the housing market to recover to raise the house value rather than lowering the mortgage principal.
“Do they even allow that story in public schools?”
Not any more they don’t. :0/
My youngest daughter...called last night all upset, because her laptop apparently has crashed.
I happened to be under the house in the dirt...fixing a leaking NATGAS pipe. It was only 106 degrees here yesterday..
I bot two new truck tires a few weeks ago...got a unfixable flat in one of them. Gotta buy a new one, I guess.
My desktop PC took a dump a month ago....had to buy a new one.
The point I told my girl....is this is just life. Sometimes we do everything right, but still things go wrong.
Good luck.....
Don't feel like the Lone Ranger. This makes me spit nails.
I wonder, what do taxpayers who rent think about this idea?
You forgot “Islam the religion of peace”.
Snowe and Collins are probably set to pledge their support.
wall street called them mortgage default swaps for a reason.
They were sold WITH THE ASSUMPTIOIN OF DEFAULT and that the value of the asset exceeded the loan. So WHEN a default happened the apprasal indicated fully secured investments.
The key is to inflate the apprasal.
THAT is where the crime happened.
(remember they were sold with the assumption that default would happen)
I'm no economist or anything close to it, but some of my thoughts:
- driving down home prices to the extent possible via an action such as this will create more underwater conditions, possibly more than we have now. What do those of us that are currently paying above-water mortgages do when in a matter of a few months we find our mortgages are now underwater?
- what about recent retirees (or those close to becoming one) that have always planned on selling their homes, downsizing to more affordable housing in a more affordable area of the country and subsidizing their retirements off of the net proceeds? Sure one can argue that "investing" in your primary residence with the hope of reaping a windfall profit is a bad investment concept, but millions upon millions of people have done exactly that.
- what happens if you can't even sell your home in a market in a rapid freefall? And maybe you can't even afford to stay current on the increasing property taxes? (And don't forget about all of the new EPA regulations that will require "certification" of your house before you can sell it (again, some houses will cost more to get "certified" than the amount of equity the home owner planned to walk away with, this gets even worse as values are driven downward).)
- what happens to the job market when millions of people that planned to "retire" in the next few years (in part based on selling their home and moving to a more affordable area) realize that they can not afford to retire and need to keep working (if their companies will keep them on), there go a lot of potential job openings for younger workers...
- what happens to the private property rights of those forced into accepting some form of government "forgiveness" of their debts, who will hold title to the property?
- what are the effects on trust in contracts and long-term obligations (even beyond housing)?
- what about the impact of the fact that the "government" (i.e., us) has NO MONEY to pay for such a fiasco? That means that the Fed will be injecting more fiat money into the economy, long-term federal debt increases (but hey what do several hundred billion more dollars mean when we are already at the level of trillions that are completely unsustainable?), and taxes will be driven up even higher...
I am sure that there are many many more that can be listed, these are just a few initial thoughts. Prepare.
If this starts to smell real we ought to all call our mortgage companies and let them know we will stop making mortgage payments if they don’t pressure the White House to abandon this plan. Why on earth should those of us making house payments keep paying if Obama is going to bail out less responsible people, plundering those of us who are being responsible?
The gubmint will make up the loss by taking away the mortgage interest deduction....
That is not necessary. Do what many of these people did. Take out a 125% loan on your current house.
I guess by implementing my phrophecy, it would be “fairer” if only those that had debt forgiven would be subject to the no mortgage interest deduction...
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