What does this mean?

http://www.treasury.gov/press-center/press-releases/Pages/tg1059.aspx

The government will slowly get out of the mortgage business.

The pace will be glacial.

Fannie will put 1000s of Broker Manuals against all the doors of their palace and no one will be able to get in to see what they actually do all day.

understood . . . my thought is interest rates will go up as Fannie and Freddie go out

LOL

Interest rates going up as well as intentionally pushing potential buyers out of the market is the plan. From what I gathered from the quick skim of the statement, the Obamanation suggests raising the downpayment requirements, increase fees, and increase the PMI rate.

Yeah, that sounds like a great economic recovery plan to me. Killing the American Dream of homeownership and turning the US into a nation of renters. Who are we going to rent from? The foreign investors buying up all the property? The US Elite who preach environmentalism while flying across the country on their private jets?

One more step towards a "ruling party" and class warfare. They must be using Animal Farm as their playbook.

Yep . . . you got it BaddestCross . . . raising the down payment to 10% will cut a lot of buyers out of the market. This whole thing is because Fannie and Freddie were not making a profit for their stakeholders, at the same time; Fannie and Freddie were getting preferential treatment because they were government sponsored entities. They were GSE's who rested on the taxpayers back. We the taxpayers always wind up paying the bill for mismanagement by others while others fly across the country on their private jets.

It's amazing to me that everyone whines that the government is too involved in private enterprises such as home ownership and blame gov't for all the ill prepared now failing and defaulting home owners on the gov't financing subsidized loans..but .now the govt is purposing a slow wind down eliminating their involvement in the industry..whiners come out again and blame gov for not controlling the private industry of mortgage lending...
cant it have it both ways...get a grip..if you cant put down a 10% downpayment you probably shouldnt be buying a house..or maybe you should be buyer a smaller house that you can afford the 10% down payment on...
personal responibility is a function of the individual...

For many the "American Dream" of homeownership is a pipe dream. Some segments of our population cannot afford to buy or own a home. To encourage them into thinking that they can is cruel. And when they can't, they believe it's the result of some hidden plot or conspiracy against them, or some form of discrimination.

I doubt very much that anything will change. Politicians need to keep selling pipe dreams and legislating "social justice".

Raising interest rates now will definitely have a huge effect on recovery, probably not the one that the administration wants to achieve but spectacular anyway. I would not count much on foreign investors at this point or any time soon. The main reason they were investing so much in US real estate was market stability with US government guarantee in form of Fannie and Freddie involvement. Now with default rate not slowing down and government talking about exiting the market I do not see them picking up the tab.

I always laugh when I see the NAR rhetoric about the "American Dream". For some people, ownership of anything is wrong. That's why places like Aarons furniture and appliance rentals exist. That's why you can lease a car.
Home ownership gives a buyer certain rights but also gives them a list of responsibilities. Irresponsible people become defaulters which become REO's.

When I lived in Florida I had a friend-client that owned a lot of rental property. Whenever he would be complaining about something a tenant did (or didn't do) his wife would simply say to him "Andy, that's why their renters".

There's a big difference between enabling lower income buyers that can afford homeownership to obtain a mortgage with a lower downpayment and pushing homeownership on people that cannot afford it (along with all the additional costs involved).

When FNMA was independent and only insured mortgages for qualified buyers it was a good thing. Now that they are govt entities and are actually are buying the paper and holding the mortgages it is too much govt intervention.

In the early '90s when the Clinton regime along with ACORN and other such groups lobbied for the huge push of homeownership for everyone - whether they should or could afford it - FNMA rules began to change and the whole mess we're experiencing now began.

There's no whining here, just amazement that the more things change, the more they stay the same.

when you say everyone...I assume you mean "everyone"...no matter what...I am trying my best to adhear to the fair housing laws...because Ive been in some awfully nice..."messy" homes...

Along with Home Ownership comes a restriction on your freedom of movement.

Tenants are usually held to no more than a year's lease, and can often break a lease anyway.

Owners lose that freedom, and in an il-liquid market, often find that they are stuck, unable to pursue opportunities elsewhere.

Some of us rent the Real Estate; others of us rent the Money (via a Mortgage) in order to call ourselves "Owners".

In the end, none of us really "owns" the Real Estate . . . . we're just the temporary custodians of it.

Yes, I do mean everyone. However, there was a huge push by ACORN and the like to push ownership on a certain class of minorities because that group was "underrepresented" in the ownership stats.

The problem with pushing anything on anyone just because that group isn't "equal" with disregard to the individual circumstance of the member of that group is a problem waiting to happen. Especially when we're talking about putting someone under the burden of tens or hundreds of thousands of dollars of debt when that person cannot service that debt. A lot of folks were lied to and given loans they would never be able to afford in the long run in the name of equality.

All things considered, I'd rather be equal in happiness and security than in foreclosure and bankruptcy.

Interesting perspective regarding interest rates:

http://www.totalmortgage.com/blog/mortga...eclosures/10145

the double dip in lower values will occur with the forclosures now settling into areas that had been fairly stable up until last year...ie the midwest...thats my opinion...because in the past 10 years I have never been this busy...this makes me sad...overworked and crabby...

Completely agree with Stew.

Homeownership should be the result of a series of responsible actions taken by an individual, not of government mandates.

The myth of the "American Dream" is one of my biggest pet peeves. The myth effect extends beyone housing. It also extends to getting an education, going to college, to being able to become wealthy, get a good job-- on and on--that there is opportunity to achieve success if you only "try". It's a recipe for class/racial warfare, disappointment, anger, and resentment.

Because not everyone can or should go to college or can or should own a home. To give population segments the illusion they're doing well in school, we've dumbed down our curriculums so that more people graduate high school (but even that lowering of standards hasn't work); we've lowered entrance requirements (and more kids drop out than ever before). What happens is that these segements of the population believe they're being discriminated against when they can't succeed. That lack of success is systemic and entrenched discrimination.

That gives rise to opportunistic "community action" groups like ACORN and many others who extort money for themselves and money for programs to address discriminatory practices/systems that don't actually exist. And build constituencies for politicians who will throw more money at problems that don't actually exist. It's a vicious cycle.

Our Ultra-Rich Burden: The Triple Whammy

The intense concentration of wealth and income at the top of the economic ladder creates an enormous dead weight that presses down on society — and everyone in it. That dead weight crushes us three different ways.

One: The enormous rewards that flow to the summits of Corporate America and Wall Street create incentives for economic behaviors that make life miserable for average Americans.

The more wealth concentrates . . .

. . . the less job security for workers.

. . . the less leisure time for average Americans.

. . . the more workaholism in our workplaces.

. . . the more stressful the work environment.

. . . the less the retirement security.

. . . the higher credit card interest rates go.

. . . the worse customer service.

. . . the less available home insurance gets.

. . . the fewer good character actors.

. . . the less comfortable airplane travel.

. . . the less cool our society’s high-tech.

. . . the less pleasure that sports fans take from watching sports.

Two: The presence of extremely wealthy people in our midst unleashes social dynamics that frustrate the hopes and dreams of average Americans and aggravate the stresses of everyday life.

The more wealth concentrates . . .

. . . the longer Americans spend commuting to work.

. . . the less accessible art museums become.

. . . the harder to find a parking space.

. . . the shorter the life-expectancy, for everybody.

. . . the more stressful applying for and attending college becomes.

. . . the more overpriced our housing.

. . . the noisier our neighborhoods.

. . . the less compassionate our communities.

. . . the less inviting the great outdoors.

. . . the more coins that toll booths demand.

. . . the wider our waistbands.

. . . the less the sum total of our happiness.

Three: The political power of the extremely wealthy undermines society’s capacity to overcome modern life’s core problems and challenges.

The more wealth concentrates . . .

. . . the more corruption in the political process.

. . . the less robust a nation’s free press.

. . . the less attractive the helping professions become.

. . . the more resources squandered on guarding wealth..

. . . the harder to confront entrenched special interests.

. . . the less public interest in politics.

. . . the lower the voter turnout in elections.

. . . the less likely politics will seek solutions outside the box.

. . . the more frayed the social fabric.

source: http://extremeinequality.org/?page_id=9

Nice Manifesto. However, it lacks any connectivity to or foundational support for the "concentrated wealth" premise.

so that why Im...sad...overworked...and crabby...

Reason enough to stay wealthy.

Its all an illusion....no one really has anything...another bubble that will burst...

So very true. Keen observation.

We're worse off than the Egyptians, "concentrated-wealth" wise: http://georgewashington2.blogspot.com/2011/01/inequality-is-worse-in-america-than-in.html

Artiste, I like the article you referenced . . . really puts things into perspective

fannie mae and freddie mac aren't going anywhere. They will just change the name and possibly combine them.

actually I was sad yesterday was because it was my 51st birthday...LOL...I keep telling myself it doesnt matter...but it always seems to get me down...but Im over it now...still overworked...and I think the crabby part...has to do with age...

As a "two-time" Cancer Survivor, you shouldn't be sad . . . . but I guess you can be crabby if you want.

Hey, I know . . . . just to cheer up, why not take a run down to the Morgue or the Funeral Parlor and do some volunteer work to celebrate that you made it to 51.

Really?? So, you're living on $2 a day and can't afford to buy a loaf of bread?

And our government jailed 100s of members of a political party-- say, the Tea Party? And you have government rape and torture goon squads roaming your neighborhood? Is all this happening in your part of the U.S.?

Get a grip.

^^ Our gov't poisons pregnant women and disabled children to study their reactions, just to name one thing to prove you're a "consumer" and a "human resource" but not much more than that.


I won't waste my time teaching someone who's not interested in learning but we can revisit this subject in 10 years.

Maybe it's old age but I find myself becoming more and more conservative - since I started voting 50 years ago as a Kennedy Democrat, I've clearly come a long way.

I think the problems with Fannie and Freddie started many years ago when all of the lenders decided that every loan had to be "Fannie compliant" and Freddie basically went that way too. Even if the loan was staying portfolio. And it was decided to spin them off into quasi independent firms selling stock, bonds etc. Now they both have morphed into mega businesses that have become too big to fail, much like a couple of financial services firm that were bailed out a couple of years ago.

Have you ever read any of the Fannie Mae documents. The REO guide alone is over 350 pages, imagine how long the underwriting guide has become.

There is a saying about this --
If you can't dazzle them with brilliance, baffle them with BS

That's what is so funny about this "proposal". After spending over $153B bailing these two GSEs out, the proposal is now to "phase them out over time". If the WH really wanted those two GSEs dead, they would have killed them years ago in one fell swoop instead of keeping them on life support.

This appears, to me, to be an attempt to win some brownie points with voters with no real sincerity behind it.

Next you'll be telling us about "contrails", black helicopters, Monsanto, the Illuminati... and the "truth" about 911!

Yes, do talk to me in ten years when possibly you've outgrown your angry young person stage, K?

No, sorry, I don't fit your stereotype. I work with facts, not imaginings.

and it is a fact that we support home buyers and have done so for since WWII.

and it's a fact that its best for our society that we're balanced and not being overrun by marauding gangs of any type - either the street kind or the Wall Street kind.

and it's a fact that San Francisco was sprayed in the 1970's with poison to see how many people showed up in the emergency ward. That and the radiation testing on pregnant and mentally ill "human resources" is all true and I've not the time nor inclination to bother googling it for you.

NTB: Amen and amen.

Employees at Fannie & Freddie (especially Fannie) keep getting their paychecks by cranking out paperwork. If ANYONE tried to curb them, the would-be curbers will be buried in an avalanche of paper from Fannie-- WHICH contents, findings and studies Fannie would suddenly change/reverse/revise, load onto large trucks and redistribute.

If the curbers ask Fannie a question, Fannie will respond with 6 tons of paper, thousands of emails in red, white & blue; and Fannie will ask the curbers questions of their own, which they will deliver via semis. Fannie can do this for years and years until the curbers surrender.

Very Jimmy Buffet-ish (you can't own that rock it's just a waste of time).

We do have our mind's knowledge and our loved ones and times spent with them.

Those experiences or the memories of them can never be taken from us.

And also our spiritual bank can be foundational for some of us.

I agree the rest is diversionary.

Okay, now you're babbling and careening on wild tangents.

So, can we cross you off the U.S government-manufactured HIV and CIA/crack cocaine and New World Order conspiracy theories lists? Y/N?

How many times have you seen The Matrix? Be honest now.

This is not tied to the discussion in anyway. But Artiste's avatar always makes me think of when Fabio got popped by a goose. He was doing a promo for a roller coaster and had the unfortunate collision.

If the image does not display it shows Fabio with a bloody nose.

i've never seen the matrix

I'm stuck on song lyrics now and one of my favorites that I think of all the time is
"they can take my house, take my car, but they can't take my seat at the corner bar." Makes me think of Cheers.

When comparing administrations, I think of the WHO lyric:

Here comes the new boss, same as the old boss

Does the chart show how much money and military support we give each of those countries?

Hmmm...I am really really really smart, but I have to say....I have no clue what you are trying to get to with this post. Not even the start of an idea.

Phasing out Fannie and Freddie is not the answer. Further, the Obama Admin/Executive Branch cannot unilaterally put an end to Fannie and Freddie. These are recommendations to the US Congress. The Executive Branch is NOT a legislative body. The composition of the US Congress changes every two years with the election cycle.

Okay, that said, if the Congress does pass legislation that goes in this direction, will it really shrink the government's footprint in the financial markets? I doubt it. What other entity has the massive financial and administrative resources to provide for mortgage market liquidity, which is the function of secondary market participants such as Fannie and Freddie...an existing government agency, or the Federal Reserve, perhaps? I would think that the Fed is probably NOT a better alternative to GSE type entities, and a central bank really should not be involved in that business directly. Not viable...invariably those functions would need to be outsourced to private or quasi-private entities..so we're back to square one. So, regardless of the "recommendations" of the current Administration, I doubt that the GSE's will ever be shut down. They may be "modified" via statute, but not shut down.

Which one you thinking about moving to?
And yet we all still live here in the grand old USA.

People the world over give everything to come and have a chance at this shame.

Stop and wonder why.

And please take Fabio with you? Thaaaaaaanks.

I'm staying right here and supporting FHA and VA loans. You're the ones complaining about taxes, social programs, regulations and big government so I've got a suggestion for you:

Thanks for your post shana! Your scenario makes sense. My guess is the legislators had to make a recommendation on what to do with Fannie and Freddie. I just hope the attention Fannie and Freddie are getting helps to give some direction or "footing" to the market since both Fannie and Freddie got caught in the mortgage backed securities Ponzi scheme.

Silly

silly..Im not sure...there seems to be alot of unrest in the world right now...and if you think it cannot happen here...I suggest you pull your head out of the sand...I know it seem radical...but that is how this wonderful place we call America...started...Oh... I forgot....Happy Presidents Day...

That cartoon is silly.

I was careful to keep it to the cartoon and nothing/noone else.

The cartoon says, essentially, Tea Party Folks are no different than Somali Pirates.

That's silly.

And that's all I have to say about THAT!