Aa
dems plan to forgive mortgages???
http://www.huffingtonpost.com/2010/08/05/fannie-freddie-may-forgiv_n_671564.html
An August Surprise from Obama?
AUG 5, 2010 00:26 EDT
2010 | FANNIE MAE | FREDD | GSES | HOUSING POLICY | OBAMANOMICS
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. A few key points:
1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.
2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:
GSE policies are one of a dwindling number of policy levers the administration has left to pull, so it is conceivable that changes could be made, though there is no sign that a policy change is imminent. The Treasury’s essentially unlimited ability to provide financial support to the GSEs creates an interesting situation over the next twelve months: the GSEs could potentially be used to provide additional support for the housing market and, to a lesser extent, the broader economy in 2H 2001.
And this from Mizuho Securities:
As policy makers ponder their next move the data suggests that they face not only a stalling recovery but a growing risk of deflation taking root in the economy. As a result, the Administration has turned back to industrial policies by approving the purchase of a sub-prime auto lender by GM as a means for pumping up domestic sales, especially since the latest auto sales data indicates that consumers are still responsive to incentives. This precedent increases the risk that the government will use its control of Fannie and Freddie to increase consumer cash flow and juice the economy again.
Moreover, Morgan Stanley is pushing a mortgage relief plan directly to Congress. On August 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages.
3) Keep in mind the political and economic context. The nascent recovery is already running out of steam. Wall Street economists just downgraded the government’s second-quarter GDP estimate of 2.4 percent to around 1.7 percent. And as even Treasury Secretary Timothy Geithner is warning, the unemployment rate may well begin to rise back toward the politically toxic 10 percent level given such sluggish growth. Many in the White House thought the unemployment rate would be dropping sharply by this point in the recovery.
But that is not happening. What is happening is that the president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.
4) And don’t think the White House is worried about financial market reaction. If they thought it would pass Congress, they would be submitting a $200 billion Stimulus 2.0 (3.0?, 4.0?) right now.
August is supposed to be a slow month for Washington politics. But maybe not this one.
An August Surprise from Obama?
AUG 5, 2010 00:26 EDT
2010 | FANNIE MAE | FREDD | GSES | HOUSING POLICY | OBAMANOMICS
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. A few key points:
1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.
2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:
GSE policies are one of a dwindling number of policy levers the administration has left to pull, so it is conceivable that changes could be made, though there is no sign that a policy change is imminent. The Treasury’s essentially unlimited ability to provide financial support to the GSEs creates an interesting situation over the next twelve months: the GSEs could potentially be used to provide additional support for the housing market and, to a lesser extent, the broader economy in 2H 2001.
And this from Mizuho Securities:
As policy makers ponder their next move the data suggests that they face not only a stalling recovery but a growing risk of deflation taking root in the economy. As a result, the Administration has turned back to industrial policies by approving the purchase of a sub-prime auto lender by GM as a means for pumping up domestic sales, especially since the latest auto sales data indicates that consumers are still responsive to incentives. This precedent increases the risk that the government will use its control of Fannie and Freddie to increase consumer cash flow and juice the economy again.
Moreover, Morgan Stanley is pushing a mortgage relief plan directly to Congress. On August 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages.
3) Keep in mind the political and economic context. The nascent recovery is already running out of steam. Wall Street economists just downgraded the government’s second-quarter GDP estimate of 2.4 percent to around 1.7 percent. And as even Treasury Secretary Timothy Geithner is warning, the unemployment rate may well begin to rise back toward the politically toxic 10 percent level given such sluggish growth. Many in the White House thought the unemployment rate would be dropping sharply by this point in the recovery.
But that is not happening. What is happening is that the president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.
4) And don’t think the White House is worried about financial market reaction. If they thought it would pass Congress, they would be submitting a $200 billion Stimulus 2.0 (3.0?, 4.0?) right now.
August is supposed to be a slow month for Washington politics. But maybe not this one.
Here is some good news. Fresh off the wire:http://www.moneynews.com/StreetTalk/Treasury-Denies-Big-Fannie-Freddie-refinance/2010/08/05/id/366736?s=al&promo_code=A711-1
Moneynews
Treasury Denies Plans to Forgive Bad Home Loans
Thursday, August 5, 2010 02:39 PM
The Obama administration is not considering a change to its policy regarding mortgage finance giants Fannie Mae and Freddie Mac, a Treasury spokesman said on Thursday.
"The administration is not considering a change in policy in this area," said Treasury spokesman Andrew Williams.
The comment followed speculation in recent days from analysts at Wall Street firms including Morgan Stanley that suggested the administration could tweak rules at Fannie Mae and Freddie Mac to spark a major refinancing wave.
On Thursday, a Reuters Breakingviews opinion column referred to rumors in Washington and Wall Street that the administration could soon order 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.
Mortgage bond prices pared losses after the statement from Williams. Prior to the denial, investors were selling mortgage bonds that would sustain large losses if a new wave of refinancings took place.
The Reuters Breakingviews article, written by James Pethokoukis, stated that an estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion.
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, Reuters Breakingviews reported. On Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help.
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, Pethokoukis wrote.
The key date to watch is Aug. 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie, Reuters Breakingviews reported.
Pethokoukis wrote that Republican leaders believe this is going to happen since Republicans and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.
Wall Street banks, such as Goldman Sachs Mizuho Securities, are alerting their clients privately to the possibility, he said.
Pethokoukis also wrote that Morgan Stanley is pushing a mortgage relief plan directly to Congress. On Aug. 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages.
Moneynews
Treasury Denies Plans to Forgive Bad Home Loans
Thursday, August 5, 2010 02:39 PM
The Obama administration is not considering a change to its policy regarding mortgage finance giants Fannie Mae and Freddie Mac, a Treasury spokesman said on Thursday.
"The administration is not considering a change in policy in this area," said Treasury spokesman Andrew Williams.
The comment followed speculation in recent days from analysts at Wall Street firms including Morgan Stanley that suggested the administration could tweak rules at Fannie Mae and Freddie Mac to spark a major refinancing wave.
On Thursday, a Reuters Breakingviews opinion column referred to rumors in Washington and Wall Street that the administration could soon order 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.
Mortgage bond prices pared losses after the statement from Williams. Prior to the denial, investors were selling mortgage bonds that would sustain large losses if a new wave of refinancings took place.
The Reuters Breakingviews article, written by James Pethokoukis, stated that an estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion.
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, Reuters Breakingviews reported. On Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help.
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, Pethokoukis wrote.
The key date to watch is Aug. 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie, Reuters Breakingviews reported.
Pethokoukis wrote that Republican leaders believe this is going to happen since Republicans and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.
Wall Street banks, such as Goldman Sachs Mizuho Securities, are alerting their clients privately to the possibility, he said.
Pethokoukis also wrote that Morgan Stanley is pushing a mortgage relief plan directly to Congress. On Aug. 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages.
You have the right to Life, Liberty and the PURSUIT of happiness. Nowhere in the constitution does it say that other people must be forced to pay for your house. To force others to work for you is slavery. And that's been illegal for 150 years.
This "economic and social justice" is not what our country was founded on. And most people believe you need to work for you have. Only those with the "entitlement" mentality believe that it should just be handed to you. And somebody has to be the adult and pay the bills.
This "economic and social justice" is not what our country was founded on. And most people believe you need to work for you have. Only those with the "entitlement" mentality believe that it should just be handed to you. And somebody has to be the adult and pay the bills.
Who pays the difference?
Hypothetical scenario: (not really, it's happening every where):
Let's say you and your spouse bought a home for 300,000.00 some years ago, both of you were healthy and working and having no problem handling the mortgage. The economy hits bottom and one of you looses your job and health insurance. You cut back everything possible and even take a job at McDonalds, but still find yourselves falling short each month and are now a couple of months behind. Now because of the recession, houses are foreclosing left and right and your county is coming up short on taxes, so they must raise taxes to meet expenses. And home owners insurance is going up too. Throw in some health problems without health insurance. Now because of all the foreclosures and failing housing market, your 300 thousand dollar home is valued at only 100 thousand, if your lucky, with no possibility of selling for enough to pay off the mortgage, and no one knows when the market will come back to the point your house will be worth 300 thousand again. Now, you know you could afford your mortgage payments at the current value of your home (100 thou), but foreclosure seems inevitable.
Now, if they foreclose on your house, the bank will sell or auction it off for approx. 80 thousand, taking a major lose and further dropping home values in the area, which then puts many more people in the position of value is much less than their mortgage, more foreclosures and on and on.
Now your given the opportunity to refinance to the current value. You can keep your home, afford it and reduce another foreclosure.
Or you can have your house foreclosed and contribute to the further downward spiral and the bank is gonna sell your home for less than the current value.
So, what do you do?
Maybe this isn't happening to you, but it is happening all around you.
Let's say you and your spouse bought a home for 300,000.00 some years ago, both of you were healthy and working and having no problem handling the mortgage. The economy hits bottom and one of you looses your job and health insurance. You cut back everything possible and even take a job at McDonalds, but still find yourselves falling short each month and are now a couple of months behind. Now because of the recession, houses are foreclosing left and right and your county is coming up short on taxes, so they must raise taxes to meet expenses. And home owners insurance is going up too. Throw in some health problems without health insurance. Now because of all the foreclosures and failing housing market, your 300 thousand dollar home is valued at only 100 thousand, if your lucky, with no possibility of selling for enough to pay off the mortgage, and no one knows when the market will come back to the point your house will be worth 300 thousand again. Now, you know you could afford your mortgage payments at the current value of your home (100 thou), but foreclosure seems inevitable.
Now, if they foreclose on your house, the bank will sell or auction it off for approx. 80 thousand, taking a major lose and further dropping home values in the area, which then puts many more people in the position of value is much less than their mortgage, more foreclosures and on and on.
Now your given the opportunity to refinance to the current value. You can keep your home, afford it and reduce another foreclosure.
Or you can have your house foreclosed and contribute to the further downward spiral and the bank is gonna sell your home for less than the current value.
So, what do you do?
Maybe this isn't happening to you, but it is happening all around you.
yes it really is... it means at least another 100 billion put on the tax payers to pay for people's houses! Where do we live?
"In other words, it’s exactly the same kind of Obamanomics that we have seen for the last eighteen months — spend what we don’t have now, run up debt like crazy, and hope that a momentary spike will translate into political success. Unfortunately, that has also been the formula for long-term economic failure."
http://hotair.com/archives/2010/08/05/is-obama-about-to-forgive-billions-in-mortgage-principal/
"In other words, it’s exactly the same kind of Obamanomics that we have seen for the last eighteen months — spend what we don’t have now, run up debt like crazy, and hope that a momentary spike will translate into political success. Unfortunately, that has also been the formula for long-term economic failure."
http://hotair.com/archives/2010/08/05/is-obama-about-to-forgive-billions-in-mortgage-principal/
Oh my God! Is he accelerating bankrupting us because he knows the Democrats will lose in November? Scared the Republican Congress will veto any more of his unfunded mandates? This is crazy. No wonder the economic adviser resigned. She no longer wanted to be associated with this madness.
I don't understand this one at all.It makes no economic sense whatsoever. Melimeli, you given up a lot and live within your means. My DH is in sales and his commission is down so we have really cut back. Why can't the government figure out you don't spend your way out of a recession. I pray this one doesn't go through. This is ludicrous.
I don't understand this one at all.It makes no economic sense whatsoever. Melimeli, you given up a lot and live within your means. My DH is in sales and his commission is down so we have really cut back. Why can't the government figure out you don't spend your way out of a recession. I pray this one doesn't go through. This is ludicrous.
Ya reward irresponsibility with a free house! Man I wish I would have bought a million dollar house if I would have known my loan would be forgiven! Can anyone say BUYING VOTES??? What happened to natural consequences? You bought a house without researching? Without understanding interest rates? natural consequence... bye bye house.. sorry you will have to go back to an apartment. What is going on? You are not entitled to a free house! You are not entitled to be bailed out! Lost your job? So sorry my dh lost his job 2 years ago (not much demand for architecture now a days) Do what you can do to get by... We have soup and sandwiches twice a week to save on money. We don't go out as much. We budget every cent. That is what happens. If you didn't save for a disaster then you have to deal with it. My god... be a man, or a woman and say I messed up and now I need to change. I need to go back to ground zero and rebuild. I need to take that extra job at mcdonalds or the paper route and yes they ARE hiring. Just no one wants to get off their *** to work for minimum wage. Not when the dems are there handing out free money! ufffff
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