I would support this Obama proposal

[CosmicCowboy]

http://www.cnbc.com/id/44269404

The Obama administration is considering further actions to strengthen the housing market, but the bar is high: plans must help a broad swath of homeowners, stimulate the economy and cost next to nothing.


President Obama's administration is weighing proposals to strengthen the housing market.

One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions who asked not to be identified because they were not allowed to talk about the information.

A wave of refinancing could be a strong stimulus to the economy, because it would lower consumers’ mortgage bills right away and allow them to spend elsewhere. But such a sweeping change could face opposition from the regulator who oversees Fannie Mae and Freddie Mac, and from investors in government-backed mortgage bonds.

Administration officials said on Wednesday that they were weighing a range of proposals, including changes to its previous refinancing programs to increase the number of homeowners taking part. They are also working on a home rental program that would try to shore up housing prices by preventing hundreds of thousands of foreclosed homes from flooding the market. That program is further along — the administration requested ideas for execution from the private sector earlier this month.

But refinancing could have far greater breadth, saving homeowners, by one estimate, $85 billion a year. Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.

Exactly how a refinancing plan might work is still under discussion. It is unclear, for example, whether people who are delinquent on their mortgages would be eligible or whether lenders would administer it. Federal officials have consistently overestimated the number of households that would be helped by their various housing assistance programs.

A working group of housing experts across several federal agencies could recommend one or both proposals, or come up with new ones. Or it might decide to do nothing.

Investors may suspect a plan is in the works. Fannie and Freddie mortgage bonds had been trading well above their face value because so few people were refinancing, keeping returns on the bonds high. But those bond prices dropped sharply this week.

Administration discussions about housing proposals have taken on added urgency this summer because the housing market is continuing to deteriorate. On Wednesday, the government said that prices of homes with government-backed mortgages fell 5.9 percent in the second quarter from a year earlier, the biggest decline since 2009. More than one in five homeowners with mortgages owe more than their homes are worth. Some analysts are now predicting waves of foreclosures and a continuing slide in home prices.

There is not much time to help the market before the 2012 election, and given Congressional resistance to other types of stimulus, housing may be the only economic fix in reach. Federal programs to assist homeowners have been regarded as ineffective so far, and they are complex.

“We are looking at trying to encourage more participation in all of the programs, including those that help with refinancing,” said Phyllis Caldwell, who oversees housing policy at the Treasury Department.

[boutons_deux]

banks, mortgage servicers, etc won't go along, and Barry can't force them.

but somehow, the Dems FORCED all the banks to implement CRA which is a main cause of the housing crisis. :lol

[RandomGuy]

Interesting article.

Not sure who will end up taking the haircut for the underwater mortgages though.

Depending on how they do it, if the homeowners have to take it, there won't be as much of a stimulative effect as one might think, simply because if the homeowners have to keep their mortgages underwater that means an aweful lot of people can't/won't sell their houses, and that takes a lot of supply/demand out of the market.

If they don't force a haircut (reduce amount of loan), then it won't really fix one of the underlying problems. Help, but not fix.

I don't see the housing market bouncing back any time soon. People have to pay down their underwater mortages a few more years to get *some* equity back.

[Borat Sagyidev]

The Housing Market of the past decade is likely the most widespread scam in the history of the country. Housing should not cost as much as it does, the increases we saw last decade were on par with Australia, except we're not Australia that has 25% of its population born overseas, limited residential area and a extremely high tax rate ~50% for middle income. (their housing prices are still high btw)

People pushed the prices higher and loan rates higher to make money superficially. Look for the pricing to continue to drop, especially as the value of the dollar drops

[Wild Cobra]

Ouch...

I agree with Boutons.

[coyotes_geek]

I think the only way to make it work is to put the taxpayers nuts on the chopping block by making them liable for the portion of the mortgage that's underwater. Taxpayers shouldn't be very excited about that situation, but without that taxpayer guarantee there's no way to get the lenders to refinance homeowners who don't meet the tougher lending guidelines that the government told the lenders to put in place.

[boutons_deux]

I much rather that Geithner cram the $1T+ toxic shit he bought back down the throats of the banks and get it off taxpayers' backs.

[Wild Cobra]

I'm sorry, but the people who are upside-down... Their mistake.

The banks who lent the money on these properties... Their mistake.

I don't see a problem. My children and grandchildren are already upside-down too much with the future debt of this nation. I say no more.

[boutons_deux]

"I say no more."

You Lie

[coyotes_geek]

I much rather that Geithner cram the $1T+ toxic shit he bought back down the throats of the banks and get it off taxpayers' backs.

Sounds nice in theory, but we all know that if we force the banks to eat their turd sandwich we'll just end up bailing them out again when they choke on it. So what's the point?

[CosmicCowboy]

I'm sorry, but the people who are upside-down... Their mistake.

The banks who lent the money on these properties... Their mistake.

I don't see a problem. My children and grandchildren are already upside-down too much with the future debt of this nation. I say no more.

Maybe you don't get it. This would also apply to homeowners that aren't upside down but can't refinance because they don't have absolutely PERFECT credit. The bar has been raised absurdly high to refinance. Lets say you have people that are making a $1500 nut on their 7.5% loan but got late on their credit cards a couple of times and can't refinance. Loosen the reins a little and let them refinance at 4.5% and their nut drops to say $1100 a month giving them some extra cash to catch up on other debt and/or spend and stimulate the economy. If they have proven they can pay $1500 they can certainly pay $1100.

[coyotes_geek]

Wife & I are doing a refi now. It's definitely been a pain in the ass.

[ElNono]

It's stupid, IMO. It does nothing to incentive spending. It's like the tax cuts or the stimulus checks. People save and pay off debt.

You need a program like that "Cash for clunkers" to really incentive both the dealers and the customers.

[ducks]

people who are upside down should buy another house then let their other on go

FUCK THE AMERICANS who want the gov and banks to bail out their stupidy

[ducks]

Wife & I are doing a refi now. It's definitely been a pain in the ass.

ducks did
cut his interst rate in half:toast

[ducks]

It's stupid, IMO. It does nothing to incentive spending. It's like the tax cuts or the stimulus checks. People save and pay off debt.

You need a program like that "Cash for clunkers" to really incentive both the dealers and the customers.

people who take 300 or more off the mortage payments will have that much more to spend elsewhere
sure some will save some but if retailers offer good deals they will be stupid and buy something with that money

[George Gervin's Afro]

people who are upside down should buy another house then let their other on go

FUCK THE AMERICANS who want the gov and banks to bail out their stupidy

I think sucks needs to run for office..great campaign message

[coyotes_geek]

ducks did
cut his interst rate in half:toast

Nice. :tu

We already refi'd once back in 2009, so we're not getting to cut by half, but still getting -1.5%.

[cheguevara]

yup I heard these days refinancing is equivalent to having a pole stuck inside of your ass, then taken out and then put inside again, repeat this for about 10 days straight.

fuck refinancing

[boutons_deux]

the regs for re-financing a mortgage are the same or about the same as for a new mortgage.

if those regs had been respected in the 2000s, then no predatory lending, no housing bubble, no sub-prime crisis.

The overwhelming, primary responsibility for the mortgage crises is with the lenders who show now, as always, that they know perfectly well how to disqualify borrowers, rather than trap them into failing mortgages while flipping the mortage into Wall St casino.

New Rule (with no chance of implementation): lenders must hold and service the mortgage to maturity.

Adult countries like Denmark use that rule and had no mortgage crisis.

[ElNono]

people who take 300 or more off the mortage payments will have that much more to spend elsewhere
sure some will save some but if retailers offer good deals they will be stupid and buy something with that money

Like they did with their tax cuts? Don't see it.

[Wild Cobra]

Maybe you don't get it. This would also apply to homeowners that aren't upside down but can't refinance because they don't have absolutely PERFECT credit. The bar has been raised absurdly high to refinance. Lets say you have people that are making a $1500 nut on their 7.5% loan but got late on their credit cards a couple of times and can't refinance. Loosen the reins a little and let them refinance at 4.5% and their nut drops to say $1100 a month giving them some extra cash to catch up on other debt and/or spend and stimulate the economy. If they have proven they can pay $1500 they can certainly pay $1100.
No, I do get it. The bar is raised because there is a set price point to insure profits. They abandoned that in the past. To lower the interest rates and lower the bar and insured by the government....

Just how much do you want to put tax payers on the hook for?

If the standards are too high, let the banks lower or lobby to lower the rates to attract customers. Don't subsidize them though.

[boutons_deux]

Billions Meant for Struggling Homeowners May Pay Down Deficit Instead

One place they won't be looking: an estimated $30 billion from the bailout that was slated to help homeowners but is likely to remain unspent.

Instead, Congress has mandated that the leftover money be used to pay down the debt.

The low number reflects how little the government's home loan modification and other programs have actually helped homeowners deal with the foreclosure crisis.

The programs have been marked by poor oversight and consistent under-enrollment. Homeowners have been forced to navigate an often bewildering maze at banks marked by slow communication, lost documents and other mistakes.

http://www.propublica.org/blog/item/as-administration-scrambles-to-help-homeowners-billions-left-unspent

[coyotes_geek]

yup I heard these days refinancing is equivalent to having a pole stuck inside of your ass, then taken out and then put inside again, repeat this for about 10 days straight.

fuck refinancing

It's definitely a pain in the ass, but one you get well compensated for.

[boutons_deux]

"To lower the interest rates and lower the bar and insured by the government...."

mortgages up to jumbo have been backed by the govt for many years, nothing new.

That was/is a govt policy, the govt you hate, to stimulate home building/ownership, as is the govt-policy of tax-deductible mortgage interest.

Both policies are really just subsidies to the mortgage lenders, which is the real reason those policies exist.

[CosmicCowboy]

No, I do get it. The bar is raised because there is a set price point to insure profits. They abandoned that in the past. To lower the interest rates and lower the bar and insured by the government....

Just how much do you want to put tax payers on the hook for?

If the standards are too high, let the banks lower or lobby to lower the rates to attract customers. Don't subsidize them though.

WC, they aren't talking about any subsidies. Just reasonable refinances. Pay off the older higher interest note (held by someone else) and refinance them at a lower rate. No government money involved.

[jack sommerset]

The government needs to butt out.

[Wild Cobra]

WC, they aren't talking about any subsidies. Just reasonable refinances. Pay off the older higher interest note (held by someone else) and refinance them at a lower rate. No government money involved.
As long as it's not "government-backed mortgages," then I'm fine with it.

Just how does that happen?

[ElNono]

As long as it's not "government-backed mortgages," then I'm fine with it.

Just how does that happen?

Lenders take a hit on the interest. Since the loans are government-backed, they can have that kind of say on the matter (or so they think)

[Wild Cobra]

The government needs to butt out.
Yes.

The people also need to also stop relying on government!

[ElNono]

Yes.

The people also need to also stop relying on government!

The people didn't specifically ask for this.

[CosmicCowboy]

As long as it's not "government-backed mortgages," then I'm fine with it.

Just how does that happen?

The way the mortgage market works the loans are originated and funded by a bank. That bank does not hold the note to term. The bank then flips the note to Freddie/Fannie/Sallie and earns an origination fee. They may or may not continue to collect on the note for a fee. Thus, you may still be making your payments to "Chase" but Chase no longer owns the note That frees their money up to originate more loans. Fannie/Freddie/Sallie then package these notes into large blocks and sell them to investors. The investors know when they buy a package of 30 year notes that they won't all last 30 years. Until the housing bust the average time a homeowner stayed in a house/note was 7 years. They also knew that if interest rates dropped the notes coulkd be refinanced and paid off early. Fannie/Freddie/Sallie are the the gate keeper/collector and distribute the payments to the appropriate owner of the notes.

The problem was that when the market blew up they radically tightened the credit requirements for refi's. People that were in higher interest home loans and making their payments religiously but had credit blemishes couldn't refi and were stuck with their higher house payments. They were locked in.

As I understand it, this plan would allow people that are current in their high interest mortgage payments to refi even with some credit hickeys into lower interest/payment mortgages. the theory is, if they can maker a $1500 note they can certainly replace that with a $1100 note.

The hope is that those that may even be underwater in their homes now would continue to make their payments and "ride it out" and not surrender their homes to foreclosure if money got too tight.

[Th'Pusher]

Regardless of how effective this would be, it's likely the only 'stimulus' Obama has any chance of getting through congress. That said, I would be surprised to see the republicans oppose this just to spite him even if thy think it would be effective. That's pretty much all they've done since he got into office.

[Wild Cobra]

As I understand it, this plan would allow people that are current in their high interest mortgage payments to refi even with some credit hickeys into lower interest/payment mortgages. the theory is, if they can maker a $1500 note they can certainly replace that with a $1100 note.

The hope is that those that may even be underwater in their homes now would continue to make their payments and "ride it out" and not surrender their homes to foreclosure if money got too tight.
Yes, but rates are based on risk. The government should let the lenders assess that risk.

Like I said, as long as it isn't government backed.

[coyotes_geek]

The way the mortgage market works the loans are originated and funded by a bank. That bank does not hold the note to term. The bank then flips the note to Freddie/Fannie/Sallie and earns an origination fee. They may or may not continue to collect on the note for a fee. Thus, you may still be making your payments to "Chase" but Chase no longer owns the note That frees their money up to originate more loans. Fannie/Freddie/Sallie then package these notes into large blocks and sell them to investors. The investors know when they buy a package of 30 year notes that they won't all last 30 years. Until the housing bust the average time a homeowner stayed in a house/note was 7 years. They also knew that if interest rates dropped the notes coulkd be refinanced and paid off early. Fannie/Freddie/Sallie are the the gate keeper/collector and distribute the payments to the appropriate owner of the notes.

The problem was that when the market blew up they radically tightened the credit requirements for refi's. People that were in higher interest home loans and making their payments religiously but had credit blemishes couldn't refi and were stuck with their higher house payments. They were locked in.

As I understand it, this plan would allow people that are current in their high interest mortgage payments to refi even with some credit hickeys into lower interest/payment mortgages. the theory is, if they can maker a $1500 note they can certainly replace that with a $1100 note.

The hope is that those that may even be underwater in their homes now would continue to make their payments and "ride it out" and not surrender their homes to foreclosure if money got too tight.

The concern though is will the investors who end up buying those mortgage bundles from F&F be willing to touch new bundles that include some upside down mortgages? I'll bet they don't without there being some kind of government guarantee to cover the difference if that mortgage fails and the house needs to be foreclosed on. Without that guarantee, you're basically asking them to buy uncollateralized debt at a very, very low interest rate. One way or the other, the taxpayers are going to end up being on the hook for something. Be it a guarantee to the investors buying the bundles, or be it through F&F having to hold on to those mortgages themselves.

My other concern is that in order to get people into these refinances, you have to relax lending standards. Something just doesn't feel right about using relaxed lending standards to get out of a financial crisis caused by relaxed lending standards.

[Wild Cobra]

My other concern is that in order to get people into these refinances, you have to relax lending standards. Something just doesn't feel right about using relaxed lending standards to get out of a financial crisis caused by relaxed lending standards.
I concur 100%.

[ChumpDumper]

It wouldn't have been much of a crisis had it only been a bunch of foreclosures.