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Thread: Closing Fannie & Freddie

  1. #1
    Senior Member Gerry Clinchy's Avatar
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    Default Closing Fannie & Freddie

    http://www.foxnews.com/politics/2013...d-freddie-mac/
    This could be one of the few ideas I agree with from Obama.

    However, I can see things that could cause problems for the economy if the closing is not well structured.

    Fannie and Freddie currently own or guarantee half of all U.S. mortgages and back nearly 90 percent of new ones.


    If the private sector is going to be responsible for all loans, they will revert to sensible underwriting ... not the free-wheeling stuff that caused the bubble that got us into this whole mess. This should put at least a temporary lid on the still-struggling housing market. I have a client right now that is a good risk with heavy down payment, who is having a devil of a time getting qualified for $150,000 mortgage. This is not a govt-insured mortgage. She gets $X income from her former husband, and payments have been regular and timely (not alimony, but rather getting her share of their marital assets in installment payments). The mortgage lender will not count this income since the way the agreement with ex is written does not fit their "guidelines".

    So, in some cases, good buyers will have a tougher time getting mortgages.

    Also this is coupled with Obama's already stated intention to compel various areas to provide "affordable" housing for low-income individuals, in the interest of "diversity" within communities.

    I might suspect that the govt will end up subsidizing the "affordable" housing.

    I also am wary that Mr. Holder will find a way to lean on the lenders if he thinks they are discriminating against low-income buyers. It's been done before ... another part of the bubble problems, when lenders were compelled to give loans that made no sense based on income v. loan amounts. Would anyone be surprised at Holder doing this?
    The president will also look to link his housing proposals to immigration reform, his top second term legislative priority. Officials said he will argue that legal immigration can stimulate the housing market, noting that immigrants accounted for 40 percent of new homeowners nationwide between 2000 and 2010, according to the Obama administration.
    Without specific info on those loans, this isolated statistic could be misleading. However, considering the number of defaults on loans written from about 2004 to 2008, these same people must also represent a significant number of the defaults? Would make some sense, but more info is needed.

    I just wonder if a not-so-bad idea on the surface could be turned into another nightmare in its implementation. The idea of providing health care insurance to those with pre-existing conditons was not a bad idea. However, nobody expected that implementing that idea would result in turning everybody else's health insurance into such a nightmare.









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  2. #2
    Senior Member luvmylabs23139's Avatar
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    The gov't should get out of all loans! We really need to get back to letting banks decide without gov't influence who is and who is not a good risk. They also should be allowed to determine what amount of down payment is required. Carter started this mess.
    The higher the down payment the less likely to default for no other reason than the borrower has more at stake.
    The house next door to me is finally about to get a final forclosure so the bank can do something with it. It has been vacant for almost 3 years. It now has mold hazard warnings on it. If the gov't was not in the loan business this may well not have happened. Besides not ever having any real money in the house the gov't gave them somehow a small business loan at taxpayer expense for over half a million dollars yet they had maybe tops 5k of equity in the house. The house itself now worth zero, zip, nothing. The lot has value.
    I wish the bank could get thru all the garbage and be done.
    Hihope Hiland Heathen of Perth CD, RE, CGC, TDI

  3. #3
    Senior Member GaryJ's Avatar
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    Quote Originally Posted by luvmylabs23139 View Post
    The gov't should get out of all loans! We really need to get back to letting banks decide without gov't influence who is and who is not a good risk. They also should be allowed to determine what amount of down payment is required. Carter started this mess.
    The higher the down payment the less likely to default for no other reason than the borrower has more at stake.
    The house next door to me is finally about to get a final forclosure so the bank can do something with it. It has been vacant for almost 3 years. It now has mold hazard warnings on it. If the gov't was not in the loan business this may well not have happened. Besides not ever having any real money in the house the gov't gave them somehow a small business loan at taxpayer expense for over half a million dollars yet they had maybe tops 5k of equity in the house. The house itself now worth zero, zip, nothing. The lot has value.
    I wish the bank could get thru all the garbage and be done.
    I agree with letting banks decide who is eligible. If I remember correctly Freddie Mac came during the depression and continues on. I am afraid more govt programs that start during this past recession will be with us for long time too.
    Hebrews 11:3 By faith we understand that the worlds were framed by the word of God, so that the things which are seen were not made of things which are visible.

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    Quote Originally Posted by luvmylabs23139 View Post
    The gov't should get out of all loans! We really need to get back to letting banks decide without gov't influence who is and who is not a good risk. They also should be allowed to determine what amount of down payment is required. Carter started this mess.
    The higher the down payment the less likely to default for no other reason than the borrower has more at stake.
    .................................................. .................................................. ....................
    You got that right. The government should get out of most things. I really can't name one cotton pickin' thing that the government got into that they did not mess up.
    charly

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    Senior Member Buzz's Avatar
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    Quote Originally Posted by charly_t View Post

    You got that right. The government should get out of most things. I really can't name one cotton pickin' thing that the government got into that they did not mess up.
    Seriously. I just visited a couple of National Parks. I for one am glad they are there for all to enjoy. Just wanted to throw 1 thing out there.
    "For everyone to whom much is given, of him shall much be required." -- Luke 12:48

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    Senior Member BonMallari's Avatar
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    Quote Originally Posted by charly_t View Post
    You got that right. The government should get out of most things. I really can't name one cotton pickin' thing that the government got into that they did not mess up.
    US Fish and Wildlife....without them states would go crazy with waterfowl limits
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    Senior Member Brad Turner's Avatar
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    Quote Originally Posted by Buzz View Post
    Seriously. I just visited a couple of National Parks. I for one am glad they are there for all to enjoy. Just wanted to throw 1 thing out there.
    X2 on this.
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    Senior Member kdeckels's Avatar
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    It should be as simple as banks decide who is "eligible", but it doesn't always work that way. Many times like any business, it's what helps or hurts their balance sheet.
    HR True Grits Finer Edge

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    Quote Originally Posted by BonMallari View Post
    US Fish and Wildlife....without them states would go crazy with waterfowl limits
    Glad you boys could name something
    charly

    There ought to be one day -- just one -- when there is open season on Congressmen.
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  10. #10
    Senior Member Gerry Clinchy's Avatar
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    Listening to bits and pieces of Mark Levin while driving today ... and he is also suspicious of Obama closing Fannie and Freddie (as am I). While agreeing that F&F should go, this is out of character for Obama to get the govt to give up any "control". He suspects Obama is going to come up with a "replacement" ... much like the govt giving student loans directly.

    I'm thinking that if this causes problems with the housing sector, that would be an excuse for some kind of direct loan program for the govt to get into. Or, with Obama's talk of affordable housing in certain areas where it is not available, that good ole Holder will start threatening to hold some feet to the fire based on civil rights "violations".

    Of course, this phase out of F&F could not possibly occur until O's tenure is over. It would have to be an orderly process or housing could tank really badly ... and O would not let that happen before the 2014 elections.

    He announced this in a speech in Nevada where housing took a big hit with the bursting of the bubble.
    G.Clinchy@gmail.com
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