You know those deadbeats who haven’t made a mortgage payment in over a year? Obama wants to take your tax dollars and let these scumbags refinance their underwater mortgage at 4%. He’d like to do it through your backdoor by having Fannie Mae and Freddie Mac take on another $70 billion of losses. These two wonderfully run organizations have already lost $130 billion of your tax dollars, so what’s another $70 billion.
This is how a socialist views the world. I have been making my monthly mortgage payments faithfully for 16 years. It doesn’t matter whether the value of the house is lower or higher than the mortgage. I have a financial obligation and I honor it. There are millions of deadbeats who have lived far above their means, took on too much debt, and never saved for a rainy day. Now they are living in homes for one or two years without making the legally required mortgage payment. Obama feels their pain. His solution is to take my tax dollars and help the deadbeat out.
People make bad decisions every day. There are consequences to bad decisions, just as there are benefits to good decisions. Obama wants to reward the people who made bad decisions at the expense of the people who made good decisions. This is just another form of warped Keynesian thinking. These blithering idiots believe that the reduction in mortgage payments will boost the economy. Absolutely ridiculous!!! These morons haven’t been making any mortgage payments. They were already spending that freed up cash on iPhones and HDTVs.
What kind of country have we become? People who can’t or won’t make their mortgage payments need to be booted out on their fat asses. It’s time for them to rent or live in their mother’s basement. The housing market needs to be cleared of the massive oversupply through price discovery. At a low enough price, someone who had been renting and saving their money will be able to afford one of the houses. At the right price, every house will sell. The banks need to write-off their bad mortgages. If that pushes them into bankruptcy, so be it. An orderly liquidation of their assets has been precedent for a couple hundred years.
Don’t let Obama screw you again.
The regulator who could block mortgage refi plan
FHFA chief could derail effort, experts say
WASHINGTON (MarketWatch) — A possible White House effort to kick-start the moribund housing market, and create a major backdoor stimulus to boost consumer spending, may be undercut by the regulator for government-seized housing giants Fannie Mae and Freddie Mac.
An idea that outsiders have said the White House is considering would allow for the refinancing of millions of underwater mortgages backed by the U.S. government. President Barack Obama is due to give a major speech after Labor Day outlining ideas to boost employment and help the economy.
Mortgage refinancing could jump-start economy
Glenn Hubbard, dean of the School of Business at Columbia University, tells MarketWatch’s Greg Robb that if mortgage owners could refinance their loans it would be the equivalent of a $70 billion tax break.
Millions of homeowners who owe significantly more than their homes are worth currently can’t refinance, but could be permitted to use such a program to refinance to current low mortgage interest rates, which are currently just north of 4%. See story on mortgage rates.
Glenn Hubbard, a former top economic advisor to President George W. Bush, said he presented such a refi plan to the White House. According to Hubbard, an estimated 37 million borrowers could save $84 billion a year, a large chunk of which would be injected into the economy.
However, for the White House to propose such an approach it would need the Federal Housing Finance Agency, an independent regulator which oversees Fannie Mae and Freddie Mac, to implement it.
That may be difficult, regulatory onlookers say, because FHFA’s acting chief Edward DeMarco has sought to limit costs of the two firms to taxpayers and that such a program would likely hike taxpayer expenditures. DeMarco became acting head of the agency in 2009 and has had worked at the agency and its predecessor since 2006 during the Bush administration. Fannie and Freddie own roughly $1.4 trillion in mortgages and mortgage-backed securities, as of June, according to the agency.
“DeMarco might not want to do it so, the question is, can the White House require him and FHFA to do it?” asked Michael Stegman, director of policy and housing at the The John D. and Catherine T. MacArthur Foundation.
“If [DeMarco] sees that the program would result in losing money and reducing revenues, he may say we’re better off where we are and not go through this.”
Analysts contend that the plan would result in a significant reduction in revenue for Fannie and Freddie, though backers say the lower interest rate will also result in some savings for Fannie and Freddie, from lower default rates and fewer foreclosures. Already the two firms have cost taxpayers some $130 billion. Read about how a plan to kick-start housing wins Jackson Hole nod
FHFA and the White House declined to comment for this article. However, DeMarco has said repeatedly that his focus is to ensure the regulator can preserve Fannie and Freddie’s assets and limit costs to taxpayers.
“We are preserving and conserving the assets principally for taxpayers so that they may realize the greatest possible return from these assets,” DeMarco said in a speech in May.
Donald Lamson, a former Office of the Comptroller of the Currency official and an attorney with Shearman & Sterling LLP, said it is possible that a White House call for such a program could create tension between the administration and the FHFA.
“There are plenty of times when an administration tells an administrative agency to do something and it doesn’t happen because the agency doesn’t want to,” Lamson said.
He added that any complications the White House has in having FHFA implement such an approach puts a spotlight on the administration’s failure to have an Obama-nominated and Senate-confirmed director of the agency.
The White House’s nominee to head the FHFA, North Carolina’s banking commissioner Joseph Smith, withdrew his candidacy after Senate Republicans expressed opposition.
Bob Davis, vice president at the American Bankers Association, also said DeMarco will have trouble with such a proposal.
“His job under the law is to be a conservator. I think he’s got to stay true to that. He runs an independent agency,” Davis said.
Capitol Hill complications
Without FHFA support, the only other route for Obama would be with legislation on Capitol Hill, something that most observers see as unlikely.
Lamson said Republican lawmakers on Capitol Hill would likely call hearings, which would focus on the question of authority.
The program would likely also extend to mortgage backed securities, which Fannie and Freddie guarantee. The private holders of these securities would experience meaningful losses of billions of dollars and Republicans may raise concerns that investors would be discouraged from investing in the sector as a result.
“I would be scheduling hearings asking, ‘what is going on here ?’” said Lamson. “Depending on the outlines of the proposal, they could ask what authority does the Obama administration have to employ the program and possibly break mortgage bondholder contracts?”
He added that it is unclear whether such a program would be beneficial politically for Obama.
“When you are parsing through all of this, there are winners and losers. Whenever you get into a reallocation of financial assets people will howl one way or another,” Lamson said. “From a political perspective lets say 10% of the population ‘wins’ but there are other people who live down the street who will be furious.”
Lamson added that there could be unintended consequences with some borrowers seeking to have their properties re-appraised in hopes of qualifying for the program and receiving the benefit.