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  1. #1
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    Oddly, giving MORE free money to loan-defaulters..

    ...isn't a good idea.
    Still trying to find the ONE ing thing this idiot has done right.

    This is the program where you , me and other taxpayers give more free money to people defaulting on their home loans--the ones that, without liberal filth, they never would have had in the first place.

    Of course, this is another example of teeming racism: You know, 'racism' for giving folks loans they couldn't afford by not making them comply with ANY of the rules of finance. Of course, before that, it was 'racism' when they were denied loans for lack of 'ability to pay'. Thanks, libs! This time you sent the entire world economy into a tailspin! Well done, indeed.

    ===============================================

    Shocker: Yet another government intervention failure story

    posted at 11:25 am on January 2, 2010 by Ed Morrissey
    Share on Facebook | printer-friendly

    The only surprising aspect of this story is the fact that it still surprises people, including the New York Times, apparently. When Barack Obama announced a $75 billion program to have everyone else in the country subsidize foreclosure protection from homeowners who got themselves in over their heads, his allies hailed it as a compassionate program that would allow those who made poor decisions with their money a chance to avoid the normal consequences of those decisions. Now it appears that the program not only failed in its mission, but actually made the situation worse for those in danger of foreclosure:

    The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

    Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

    As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

    Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

    “The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis,” said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. “We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway.

    Gee, who could have predicted this? Oh, yeah … me, and plenty of other people who wondered how a temporary modification would solve the permanent problem of living with a loan that one could not afford. At the time, the Obama administration heard many voices advising them to stay out of the mortgage business and let the system work out the problem on its own. It would have been painful, but it would have brought equilibrium back to the market and allowed investors to move ahead with greater confidence.

    Instead, people on the cusp spent eight months paying into mortgages they will still eventually lose. The danger of foreclosures will be extended, and now people have fewer resources with which to recover. The only option left for government intervention is to buy the mortgages and forgive part of the principal, which essentially means that all of us will wind up paying for homes we couldn’t afford, either — and which we were smart enough not to buy. That will also encourage more irrational risktaking in the future, as people will assume that the federal government will once again pick up the tab if failure looms again.

    Just like Cash for Clunkers and the homebuying credit, the Obama administration did nothing but kick the can down the road. Rather than addressing the real problems of the economy, Obama attempted to mask the symptoms. Even the New York Times has noticed that Obamanomics is nothing more than smoke and mirrors, only really, really expensive smoke and mirrors. In the end, we will all pay.

    http://hotair.com/archives/2010/01/0...failure-story/



    .
    There is not a truth existing which I fear
    or would wish unknown to the whole world."
    --Thomas Jefferson

  2. #2
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    Jul 2006
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    Re: Oddly, giving MORE free money to loan-defaulte


  3. #3
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    Re: Oddly, giving MORE free money to loan-defaulte

    The real estate market for a long while was a cash cow. Area's like Phoenix, AZ. based their whole economy around it. The thing is regulations should have never been relaxed. I agree the left should not of pushed to make home ownership easier for those who could not truly afford it.

    We could of avoided a lot of trouble by having the lenders only approving mortgage loans to those who could truly afford them.

    At least 10 to 15% down on a home, and a steady work history. Also what percentage of your income that goes to your mortgage payment should be looked at.

  4. #4
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    Jul 2006
    Posts
    7,767

    Re: Oddly, giving MORE free money to loan-defaulte

    the Carter-Clinton Community Reinvestment Act required banks to prove they loaned the same amount of money in poor zip codes as in rich areas. to make this work, alot of funny loans were created, like no money down and low payments for 5 years.

    http://www.ffiec.gov/CRA/

    all those subprime borrowers bidding for houses caused a price bubble - everybody had alot of equity in their home they could borrow and spend.

    some of my coworkers were bragging to me that they were buying a $250k house, ignoring my argument that the house had been worth $50k not so long ago. now they have a $200k mortgage on a $100k house, upside down, forever.

    the bubble popped.

    inflation is the only way to fix it. soon, a ham sandwich will be $50, i think. minimum wage will be $75 an hour.

  5. #5
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    Northern California
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    Re: Oddly, giving MORE free money to loan-defaulte

    Inflation is a huge concern.

    The sad thing is as far as housing industry is concerned. This mess could of affected the economy much less.

    Sure there is the fact that jobs have been drying up. Though had not the lenders approved loans to those who did not deserve, nor could pay for them.

    Well at least it would be one less thing to worry about.

  6. #6
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    Jul 2006
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    7,767

    Re: Oddly, giving MORE free money to loan-defaulte

    http://online.wsj.com/article/SB1000...980043082.html

    Happy New Year, readers, but before we get on with the debates of 2010, there's still some ugly 2009 business to report: To wit, the Treasury's Christmas Eve taxpayer massacre lifting the $400 billion cap on potential losses for Fannie Mae and Freddie Mac as well as the limits on what the failed companies can borrow.

    The Treasury is hoping no one notices, and no wonder. Taxpayers are continuing to buy senior preferred stock in the two firms to cover their growing losses—a combined $111 billion so far. When Treasury first bailed them out in September 2008, Congress put a $200 billion limit ($100 billion each) on federal assistance. Last year, the Treasury raised the potential commitment to $400 billion. Now the limit on taxpayer exposure is, well, who knows?

    The loss cap is being lifted because the government has directed both companies to pursue money-losing strategies by modifying mortgages to prevent foreclosures. Most of their losses are still coming from subprime and Alt-A mortgage bets made during the boom, but Fannie reported last quarter that loan modifications resulted in $7.7 billion in losses, up from $2.2 billion the previous quarter.

    The government wants taxpayers to think that these are profit-seeking companies being nursed back to health, like AIG. But at least AIG is trying to make money. Fan and Fred are now designed to lose money, transferring wealth from renters and homeowners to overextended borrowers.

    Even better for the political class, much of this is being done off the government books. The White House budget office still doesn't fully account for Fannie and Freddie's spending as federal outlays, though Washington controls the companies. Nor does it include as part of the national debt the $5 trillion in mortgages—half the market—that the companies either own or guarantee. The companies have become Washington's ultimate off-balance-sheet vehicles, the political equivalent of Citigroup's SIVs, that are being used to subsidize and nationalize mortgage finance.



    Fwank was not only being paid off by Fannie Mae and Freddie Mac, the horny old queen was literally in bed with a Fannie exec. Yet he's still in office, having paid no price for the massive crisis he and his colleagues created for the rest of us.
    http://www.moonbattery.com/archives/..._fwank_an.html
    Last edited by mumbles; 01-04-2010 at 11:57 PM.

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