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The Spectacle Blog
James Pethokoukis has an alarming report:
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.
Read on for Pethokoukis’s reasoning. This is just one of the many serious problems with allowing Fannie and Freddie to continue on as government-owned entities.
UPDATE: 2:30 — Here is a more skeptical take. But at the Atlantic, David Indiviglio thinks it’s a real possibility.
View all comments (8) | Leave a comment
More Blog Posts by Joseph Lawler
http://spectator.org/blog/2010/08/05/obamas-pre-election-mortgage-p
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JP| 8.5.10 @ 9:44AM
Even if the federal government forgave this huge amount, the losses still have to be realized at some point. Many of the people with underwater mortgages still would walk away due to continued delfating real estate prices. Writing off nearly a trillion dollars in bad mortgages will only depress the dollar further and continue to slide in home prices.
Pete| 8.5.10 @ 10:47AM
Payoffs are a way of life for him. He will say or do anything to remain in power. Fortunately, he is so obviously corrupt and such a divisive figure at this point that I doubt a previous disposition would change based on a blatant bribe such as this.
Charles Martel| 8.5.10 @ 11:54AM
No one ever considers the lot of renters who are waiting for the market to do what it is supposed to do: bring down house prices so that they can finally buy.
What do the renters get out of government price supports? The bill, of course. And no equity.
Let the market work. Someone is supposed to be taking the loss, and it's not supposed to be the taxpayer.
+++
Barbara Newland| 8.5.10 @ 2:15PM
I wish someone would have paid for my home. I worked hard and finally paid for it. I am 76 and still working to keep my land and business , after I pay taxes( income and real estate), and insurance and upkeep and utilities, I no longer have any extra money to save...I am very tired of paying for other people's debts !! I do NOT want a socialist country but unless Americans wake up and vote these people out who only like to take from us and line their own pockets with money ...it is only going to get worse..One will not recognize America as it use to be!! I am tired of people running down their own country...leave it if you don't like it! Why do illegals have rights??? They are ILLEGAL!!! I am for immigrants coming legally, just not the illegal ones, and yet our government is suing Arizona!!! Gimme me a break!! That is just so the hispanics will vote for Obama and also the racial slurs on the Tea Parties are geared to get the black people fired up to vote for Obama. I never think of color unless someone
brings it up...I do NOT LIKE OBAMA BECAUSE HE IS A RADICAL SOCIALIST AND NOT FOR AMERICA. HE IS A MUSLIM, AND IT HAS NOTHING WHATSOEVER TO DO WITH SKIN COLOR!!! If he were white, green or blue I would feel the same way, as most americans do!!!
dk| 8.5.10 @ 10:16PM
Its funny, all you complain and bag on "the government this" and "Obama that", what happened when George W left office? What was the shape of the country then? No, its not much better now, it may be worse, but something has to be done about all these foreclosures , I live in Az and guess what I am underwater 50% , I still pay my mortgage , yes on time. But I may never break even on my house, EVER. Its a business decision, would you stay in a house that you may never break even on? Its funny when you dont know , YOU DONT KNOW. Oh, whats your solution, people complain yet do not give any responsible solution.
dk| 8.5.10 @ 10:16PM
Its funny, all you complain and bag on "the government this" and "Obama that", what happened when George W left office? What was the shape of the country then? No, its not much better now, it may be worse, but something has to be done about all these foreclosures , I live in Az and guess what I am underwater 50% , I still pay my mortgage , yes on time. But I may never break even on my house, EVER. Its a business decision, would you stay in a house that you may never break even on? Its funny when you dont know , YOU DONT KNOW. Oh, whats your solution, people complain yet do not give any responsible solution.
deb| 8.11.10 @ 4:53PM
This is another piece of crap to make himself look like a saviour. There are plenty of people without Fannie and Freddie loans. Are they supposed to be left hanging while F&F loans are brought to market value? I don't think so. Not even the F&F deal is appropriate. The taxpayer should not be paying for this. Let the market work it out. Smart lenders could renegotiate with borrowers in ways that would cause less loss. Privately, I'll explain. If they must demand lenders cut loans, then watch out for all contractual obligations in the future. No business deal will be safe from the know it all hand of bam bam and his wrecking crew. A mortgage is a business decision. We have all learned a hard lesson. Let's not unlearn it.