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Surprise Coming Soon?

Mike

Well-known member
An August Surprise from Obama?
Aug 5, 2010 00:26 EDT
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.
 
A

Anonymous

Guest
Mike said:
An August Surprise from Obama?
Aug 5, 2010 00:26 EDT
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.

this was suppose to have been the purpose of the bailouts until they got the money and then they just stole it and gave each other big bonuses and just plain robbed us....

this is throwing the dog a bone...they stole $27 trillion and are going to give the slaves $200 billion...at least the ones stupid enough to keep those bad loans.
 

MoGal

Well-known member
I think there are a lot of people upside down, more than MSM news lets on to..... our local paper only had 2 or 3 in the weekly paper last year. This year there are 6-8 per week and it seems that most of these loans were obtained (possibly by refinancing as well) during 2000 to 2006.

We got our place in 2008 and by june of 2009 it appraised for $16,000 less (if it goes down another $16000 this year then yes we would be upside down as well) ........... however, the real estate taxes went up $30 from 2008 to 2009 and if they don't reduce them this year I'll be filing an appeal.
 

Whitewing

Well-known member
MoGal said:
I think there are a lot of people upside down, more than MSM news lets on to..... our local paper only had 2 or 3 in the weekly paper last year. This year there are 6-8 per week and it seems that most of these loans were obtained (possibly by refinancing as well) during 2000 to 2006.

We got our place in 2008 and by june of 2009 it appraised for $16,000 less (if it goes down another $16000 this year then yes we would be upside down as well) ........... however, the real estate taxes went up $30 from 2008 to 2009 and if they don't reduce them this year I'll be filing an appeal.

Homeowners used their places like ATM's for years....taking money out via 2 mortgages as long as the values were on the increase. Cancel last year's 2nd with this year's 2nd and put $5 or $6K in your pocket.....or more likely, spend the $5 or $6K to buy a new car in which you're also upside down immediately.

Once it came unraveled, game over. I don't think we've seen the bottom.
 

Mike

Well-known member
But don't you see? It's a vote buying scheme.................

The same as with most other "Entitlement" programs...

It will be done in the name of fixing the ailing economy, yet will serve only to get Democrats elected this Fall.

The reason that home prices were inflated to start with was there was too much money available from the greedy banks.....
 

Tam

Well-known member
By Mark Trumbull, Staff writer / August 9, 2010

The mortgage-finance company Freddie Mac reported a $4.7 billion net loss for the second quarter Monday, due to a rise in home loans that ended in default.
Freddie Mac requests $1.8 billion in aid after 2nd quarter loss
Homes for sale: New home sales rebound, prices keep falling

The report, following a similar loss at sister company Fannie Mae last week, underscores that the US housing market remains a central trouble spot in the economy. Because these government-sponsored enterprises (GSEs) sit at the heart of the housing market, it also means the taxpayer tab is rising for keeping these firms afloat.

In reporting the loss, Freddie Mac also said that the Federal Housing Finance Agency will ask for $1.8 billion in additional Treasury funds to support the firm. The FHFA has held Fannie Mae and Freddie Mac in a conservatorship, to keep them from failing, since they collapsed during the 2008 financial crisis.

The FHFA made a similar request for new aid for Fannie Mae ($1.5 billion) last week. The new requests mean the two mortgage companies have needed $148.2 billion to stay afloat, according to the Associated Press. About $63.1 billion of that is being used by Freddie Mac.

The infusions of cash are designed to maintain a positive net worth at both firms. The goal is not simply to prop up the firms, but to avoid a collapse in the availability of mortgage credit at a time when the housing market is already weak.

Why did they even ask, I thought the Congress lifted any restrictions on the money Fannie and Freddy were to have access to.
 
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