Obama seeks to reduce government's role in mortgages

[Schadenfroh]

http://www.npr.org/2011/02/12/133699709/downsizing-governments-role-in-mortgage-market

The Obama administration wants to scale back the federal government's role in the mortgage market.
...
The administration is determined to phase out Fannie and Freddie.
...
the federal government now bankrolls nine out of 10 new mortgages
...
"I think it's absolutely the case that the U.S. government provided too much support for housing — too strong incentives for investment in housing," he said. "We just took that too far."

Obama is wise to require any loan backed by tax payers be backed by a sizable down payment and extensive payment sustainability scrutiny. I did not realize how deeply the federal government is invested in the home mortgage business, they basically are the market. Hope that taxpayers eventually get payed back for our compulsory "investment" in this sector.

Also, is the Treasury Secretary insinuating that "affordable housing" policies contributed to the demise of Fannie and Freddie?

 

[CycloWizard]

Obama is becoming much too honest for his own good - he actually admits that the government was the problem here by making too much money too easily available. The air to inflate every bubble comes from somewhere. I'm glad he's willing to admit the problem. Maybe he's not as bad as I thought.

 

[techs]

Kewl. Between this and the declining earning power of middle class Americans home ownership will decline tremendously. Saving the US a lot of money on tax breaks.

 

[hal2kilo]

Obama is becoming much too honest for his own good - he actually admits that the government was the problem here by making too much money too easily available. The air to inflate every bubble comes from somewhere. I'm glad he's willing to admit the problem. Maybe he's not as bad as I thought.

Code for it was all caused by the Community Reinvestment Act.

Wrong.
http://www.traigerlaw.com/publications/traiger_hinckley_llp_cra_foreclosure_study_1-7-08.pdf

 

[boomerang]

Our government is never going to admit that the policies championed by Frank and Dodd have to a great degree contributed to the financial straits we're in right now. The denial associated with such a proclamation is the kind that politicians bury deep and never let see the light of day.

But our economy was already well on the way to a meltdown and the piper was eventually going to have to be paid. With luck, we'll be able to look back on our current financial troubles as a good thing because it brought it to the forefront so we could deal with at the edge of the abyss instead of as we were falling off of it.

Who'd a thunk that making mortgages easier to obtain wasn't the answer to home ownership for those that couldn't afford said mortgages? Those with rational thoughts - that's who. Old sayings oftentimes ring true. There is no such thing as a free lunch.

Folks who berate those that look at everything our government does with a jaundiced eye come to power from time to time and the results are usually messy. Our government, unbridled, is truly a dangerous thing.

This is Obama making a move to the center at a lightening quick pace. A leopard can't change its spots. It's political posturing to achieve a second term. A term in which the gloves will come back off with even greater abandon unless we have a Congress that can thwart him. Don't be fooled by what you're seeing. Giving him credit is misguided. His intentions are purely selfish. Without the change in power in Congress we'd be barreling at full speed towards our destruction. Only the rhetoric changed this past November. The misguided intent that created the mortgage meltdown still burns in the hearts of Obama and his minions.

 

[CycloWizard]

Code for it was all caused by the Community Reinvestment Act.

Wrong.

You're still illiterate. Good to know. :thumbsup:

 

[werepossum]

http://www.npr.org/2011/02/12/133699709/downsizing-governments-role-in-mortgage-market


Obama is wise to require any loan backed by tax payers be backed by a sizable down payment and extensive payment sustainability scrutiny. I did not realize how deeply the federal government is invested in the home mortgage business, they basically are the market. Hope that taxpayers eventually get payed back for our compulsory "investment" in this sector.

Also, is the Treasury Secretary insinuating that "affordable housing" policies contributed to the demise of Fannie and Freddie?

Assuming he means this, it sounds like an astoundingly good idea to me. Every mortgage should require at least 10% down, and considering the recent crash 20% down might make a better number. Bankers and mortgage companies will also be much more cautious in making mortgages with an actual risk involved. Assistance programs for low income people's housing need to stand on their own merits, NOT sliding unexamined and unaccountable into middle class programs that have arguably outlived their useful lives.

The only down side I see is that banks can make better money with less risk loaning money to the government. Unless Glass-Steagall is re-established, mortgage money may get very hard to get.

 

[spidey07]

The only real downside is rates are going to much higher stopping an otherwise dead real estate market.

 

[herm0016]

rates are too low anyway. i think this could be a step in a good direction.

 

[wirednuts]

real estate market might see an very extended drought too. the baby boomers are retiring over the next 10 years... lots of used homes will be popping up... there just wont be much need for new houses in a lot of places...

 

[hal2kilo]

You're still illiterate. Good to know. :thumbsup:

Not sure about being illiterate, but really, the big picture was that using 9/11 as an excuse, the interest rates were kept ridiculously low. The banks were acting like things people do when they're in sex play. You know," please don't make me give loans to people who don't deserved them" when they were basically getting their money for free and still making 5 percent, knowing full well that the borrowers were going to default.

 

[sandorski]

Socialized Banks!
Socialized Automobiles!
Socialized Housing!
Soc....err. wait, what?
:hmm:

 

[CycloWizard]

Not sure about being illiterate, but really, the big picture was that using 9/11 as an excuse, the interest rates were kept ridiculously low. The banks were acting like things people do when they're in sex play. You know," please don't make me give loans to people who don't deserved them" when they were basically getting their money for free and still making 5 percent, knowing full well that the borrowers were going to default.

You're really going beyond the call of duty with your strawman here, but please continue.

 

[etrigan420]

Whew...glad I got in on the "0 down, 4.5% locked, $8000 tax credit" loan when I did. :awe:

 

[OBLAMA2009]

you gotta love the way bank employee geithner came out and said that whole cause of the mortgage crisis was the government giving to much help to home owners, encouraging home ownership, when the banks just got bailed out

 

[Slew Foot]

Obama says a lot of good things, he never acts on any of them. Lets see if this is different.

 

[Zebo]

Debt does nothing but asset strip most Americans anyway. Debt does you no favors unless you buy an asset which produces more income than debt costs. Not to mention it allows people ignore wealth inequality, pay and raises RE to bubble level. This is good news. 20% down should be minimum. Skin in the game is important as well.

 

[Craig234]

Obama is becoming much too honest for his own good - he actually admits that the government was the problem here by making too much money too easily available. The air to inflate every bubble comes from somewhere. I'm glad he's willing to admit the problem. Maybe he's not as bad as I thought.

You need to read a book, to get a better understanding than that simplistic one that just has a bit of truth to it. I can recommend books if you want.

 

[Craig234]

Not sure about being illiterate, but really, the big picture was that using 9/11 as an excuse, the interest rates were kept ridiculously low. The banks were acting like things people do when they're in sex play. You know," please don't make me give loans to people who don't deserved them" when they were basically getting their money for free and still making 5 percent, knowing full well that the borrowers were going to default.

If I can restate that a bit - and this is over simplified - Wall Street figured out how to sell bad mortgages for a lot more than their cost and real value, and so they recklessly pursued massive profits for themselves and created not only a bubble - which can be on good or bad assets - but one on bad assets, and used their lobbying power to let themselves make ridiculous gambles and more and more bad loans to do this.

For example, they already had the right to bet $12 for every one they had - 'leverage' that's extremely profitable when it makes money - and then-Goldman Sachs chairman Henry Paulson before he was Secretary of the Treasury and other Wall Street moguls lobbied and got the rules to let them use even more - one of them was using 20 to 1.

When this ridiculous leveraged gambling on known bad assets crashed, we bailed them all out, because of the harms to the economy if we didn't.

The people who made the billions on this criminal behavior are all not in jail. The poor accepting homes they are offered are making a mistake, but they're not the cause.

That's like saying if the car industry found a way to make billions with finance games by selling bad car loans, and started offering Lamborghinis for $100 a month, that the people who buy the Lamborghini 'caused' the crisis when it all crashes down and wipes out the economy because the bankers made that choice. The car buyers are 'making a mistake' but the results of offering $100 per month Lamborghinis are easy to predict. The way to prevent that lies with the lenders, not the buyers.

Low interest rates fit into the Wall Street desire to pushing more bad loans.

Part of it goes back to 'moral hazard', the expectation that the biggest banks are 'too big to fail' and will get bailed out when they gamble ridiculously.

Part of to goes to criminal schemes to make the bad loans appear worth more than they were.

 

[IGBT]

so what does BF barney frank have to say about his financial social engineering cluster fusk?? BF's meddling greatly contributed to the 2008 melt down.

 

[Jhhnn]

Funny how the GSE's didn't cost the taxpayers a nickel prior to the Bush Admin's willful blindness and encouragement of the finance industry to loot the economy. Their complicity and that of Greenspan's FRB was shameful and extremely destructive to the national interest. Meanwhile, they raved patriotic slogans in pursuit of a war of aggression.

Ownership Society! didn't turn out the way they claimed it would, at all. Not surprising, given that nothing they ever promised ever has. Which is why middle and working class Righties look so stupid to rational people. Confronted with the disastrous results of the policies and ideology they believe in so fervently, Righties just dig in their heels, lash out in denial, blame the victims. They don't, can't realize that they're the victims, too. What they believe in would crumble to dust if they took an honest look at it, so they don't.

 

[DesiPower]

Kewl. Between this and the declining earning power of middle class Americans home ownership will decline tremendously. Saving the US a lot of money on tax breaks.

... and eventually the school will start doing so much better... 🙄

 

[rudder]

Debt does nothing but asset strip most Americans anyway. Debt does you no favors unless you buy an asset which produces more income than debt costs. Not to mention it allows people ignore wealth inequality, pay and raises RE to bubble level. This is good news. 20% down should be minimum. Skin in the game is important as well.

Requiring 20% down minimum would be good. It will also move Americans away from McMansions.

A zero down, 3.2% ARM? Sure why not get a 4,500 sq ft home for you, the wife, and the baby. By the time the rate resets, the value of the home will be doubled and you can sell and get something bigger.

 

[rudder]

Funny how the GSE's didn't cost the taxpayers a nickel prior to the Bush Admin's willful blindness and encouragement of the finance industry to loot the economy. Their complicity and that of Greenspan's FRB was shameful and extremely destructive to the national interest. Meanwhile, they raved patriotic slogans in pursuit of a war of aggression.

Ownership Society! didn't turn out the way they claimed it would, at all. Not surprising, given that nothing they ever promised ever has. Which is why middle and working class Righties look so stupid to rational people. Confronted with the disastrous results of the policies and ideology they believe in so fervently, Righties just dig in their heels, lash out in denial, blame the victims. They don't, can't realize that they're the victims, too. What they believe in would crumble to dust if they took an honest look at it, so they don't.

The ownership society was ruined by too many people who wanted something for nothing. The lenders were happy to comply because the risk could ultimately be passed to the taxpayer. By the height of the market Fannie mae and Freddie Mac were purchasing over 40% of subprime mortgage back securities. Underwriting went to hell. Most of the pre-2005 subprime mortgages actually performed as expected. Entitlement mentality took over and caused a crash.

 

[werepossum]

Obama is becoming much too honest for his own good - he actually admits that the government was the problem here by making too much money too easily available. The air to inflate every bubble comes from somewhere. I'm glad he's willing to admit the problem. Maybe he's not as bad as I thought.

You need to read a book, to get a better understanding than that simplistic one that just has a bit of truth to it. I can recommend books if you want.

I'm betting those books will be small and bound in attractive red bindings. 😀