Obama wants your GrandKids to pay your neighbors mortgage

[melensdad]

Looking over some investment newsletters led me to a piece from Reuters that has been published as an analysis -- or warning -- to investors.

Basically its saying that Obama is looking like he may bypass congress and use FannieMae & FreddieMac to 'bail out' home loans. Doing so would allow people who have depreciating homes with mortgages greater than their values, to modify their mortgage and would allow the banks to write down the loan principle so if you previously owed $200,000 (FIGURED USED FOR EXAMPLE PURPOSES ONLY) on your home you may end up only owing $125,000 after this political gift from the White House.

AUG 5, 2010 00:26 EDT

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. . .

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 . . . A few key points:

1) . . . 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.​

... 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.

... 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.

Remainder at link => An August Surprise from Obama? | Analysis & Opinion |​

 

[88GT]

This man is going to singlehandedly destroy my industry.

 

[ATOMonkey]

It's for your own good.

 

[Expat]

Dangit. I am so stupid. I bought a house I could afford so I will not get any Obamamoney... what is wrong with me?

 

[ATOMonkey]

You're probably working too aren't you. Dumb ass...

 

[Expat]

You're probably working too aren't you. Dumb ass...

Man, am I embarrassed....

 

[melensdad]

I wonder if it is too late to go get a mortgage ... and a second mortgage ... and a home equity loan ... and run up my credit cards?

If I do that will all you folks bail me out?

Now don't get me wrong, there were people who bought houses when the market peaked and their houses went down in value. I do understand that. I also understand that some folks bought houses and then lost jobs. But if you buy a house with 10% or more as your down payment, its very likely that as long as you made your payments your house would NOT be "underwater" because very few markets in Indiana dropped 10% in value, most areas dropped less.

For the VAST MAJORITY OF RESPONSIBLE HOME BUYERS you will be supporting the value of, and paying for, OTHER people's homes . . .

and so will your children . . .

and so will your grandchildren . . .

The US should not own FannieMae and FreddieMac, by doing so that means that our government actually owns the mortgage of roughly 80% of all homes in the USA since most banks/home lenders sell your mortgage and simply process the payments. When I took out my home mortgage I made sure the lending documents would not allow the mortgage to be sold on the secondary market, it required the bank to hold my mortgage. I did that with my first home, and with my current home.

 

[mrjarrell]

Both sides of the aisle are guilty of this. Obama's just the latest to beat the drum and hand down the debt of others. Bush did it with old peoples medications, reps and dems both have done it with healthcare and old age pensions (SS). What's one more travesty in a long line of travesties?

 

[paddling_man]

So people within markets that didn't depreciate catastrophically will still get bailed out because they effectively overspent. Me... who worked my butt off to get below the PMI amount, well, tough crap.

This is the destruction of natural selection.

 

[hornadylnl]

What difference does it make that the current value of the home is less than what you paid or owe? IE, I buy a house for $100k and borrow $100k. The value drops over the course of a few years and the house is now only worth $85k and I still owe $90k. I agreed to the sale price of the house and the terms of the loan contract. It should not matter what the current value of the house is.

If the current value is to be considered the standard, then I think I should go buy a $60k Corvette. I can then drive it off the lot and watch it depreciate at least $5k. I can then go use the government gun to force my bank to renegotiate the terms of my loan because the car is now worth less than what my pay off is.

Who is John Galt?

 

[melensdad]

Don't buy a Corvette, buy a Rolls Royce. The value of a R-R depreciates about $11,000 per week.

 

[beararms1776]

I was in McDonalds the other day and ordered then I asked the guy behind me if he was paying.

 

[ak keep the second]

I was in McDonalds the other day and ordered then I asked the guy behind me if he was paying.

hahaah i tried to rep you for this but it said to spread it around, but thats funny!

 

[revsaxon]

I got him for you.

 

[88GT]

I was in McDonalds the other day and ordered then I asked the guy behind me if he was paying.

This could only be topped if we knew without a doubt he voted for the Kenyan.

 

[beararms1776]

This could only be topped if we knew without a doubt he voted for the Kenyan.

Even if he did vote for him he wouldn't be willing pay.

 

[jedi]

Well u know he does have to make good on his promise.
http://www.youtube.com/watch?v=P36x8rTb3jI

 

[beararms1776]

Well u know he does have to make good on his promise.
YouTube - ‪Obama Is Going To Pay For My Gas And Mortgage!!!‬‎

After hearing this I had to go . Feeling much better now. Oh, Oh no wait a minute, here it comes

 

[jedi]

After hearing this I had to go . Feeling much better now. Oh, Oh no wait a minute, here it comes

Vomit all you want. But if you vomit too much I'm sure I7BO is going to fine a way to TAX you for it. Also if you vomit too much when you attempt to go get medical treatment thanks to Obamacare you are gonna be waiting a long time and by then the medical death panels will determine that since you are a gun owner (must be since you are on here) your live is not worth saving.

 

[balorg]

I can't wait for my future children to pay for this mess along with many others that the government has created over the years.