“This is cancer – this isn’t a sudden crisis that is going to erupt out of the ground.”
“We’re going to wait until well-into this, and then we’re going to do the right thing – which is restructuring.”
“MBS…. are calling their lawyers. Trustees may or may not have the note.”
“There are a lot of investors out there who don’t know what they own… they may own unsecured loans….. trustees that were supposed to do things under state law (and didn’t)… even Fannie and Freddie have issues with this.”
“…. this is not minutia; this is the letter of the law.”
“The dealer has to deliver to the trustee the notes (under NY State Law)”
…How is this supposed to help borrowers? Seriously. This is the government equivalent of a subprime teaser loan. But this is even worse. First, teaser borrowers paid at least a smidge of interest (even 2% is more than zero), which placed a teeny constraint on their ability to take on debt. Second, housing was at least appearing to increase, so it wasn’t entirely nuts (merely sorta nuts) to look to the principal value of the house as security and reason to extend yourself financially….
…This measure, as modest as it is, therefore looks like yet another backdoor transfer to banks, and a way to try to prop up housing prices (note the “stabilize housing markets” comment) and secondarily, funnel some cash to communities (note the loans are intended to be used for property tax payments too)….
Update: Ahh HousingWire says they are taking responses to their poll via the Register first. Team Obama’s answer for everything is a meeting, a poll, a panel, typical faculty lounge stuff, lol
The administration said it will first seek public response via the Federal Register listed at regulations.gov. The administration will then hold a series of public forums on housing finance reform.
Update: HousingWire has the details on the ‘poll’ Team Obama plans to take, what a disgrace! Should have and still should just do HOLC, but then Credit Suisse and UBS might take a loss, Gawd Forbid, but it is fine if taxpayers shoulder it, I call shenanigans….
The Obama Administration today puts the public behind the mic on the reform of the US housing finance system, including Fannie Mae and Freddie Mac. A list of questions published today targets the opinions of mortgage market participants, industry groups, academic experts and consumer and community organizations, according to an e-mailed statement from the US Treasury Department.
Here is the Treasury Press Release:, they do not list where to send your input, lol, but here is their contact info:
Department of the Treasury 1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
General Information: (202) 622-2000
Fax: (202) 622-6415
7:23: Shaun Donovan (HUD Sectry) says he does NOT believe the stress on housing affordability fueled the crisis and that it was vagueness in the programs that was a problem. Oh boy.
Ed Royce R-CA is disputing this and citing Geithner’s previous testimony that the GSEs used the affordability mandates to buy bad loans…well yeah!
Okay we’re 20 mins in and it’s a smack down, you must watch this hearing!
now Mel Watt D-NC is talking up low income rental housing and the GSE roles in that. This is one of Barney Frank’s pet plans. I have long said they will take these foreclosed homes and convert them to Section 8 after families lose them. Unreal.
ZOMG!! BUY A FRAKKIN CLUE TEAM OBAMA!!!! Lordy, Lordy..I thought these guys were SOOPER GENIUSES who had a plan before he even took office!
Now we have an uncapped FAN FRED FHA debt growing exponentially and they want to take a frakkin poll? Are you frakkin kidding me?!
The hearing with the House Financial Services Cmte has begun and Spencer Baucus R has nailed the issue-
Ranking Member Spencer Bachus gives opening remarks at a Financial Services hearing on the future of housing finance, where the Obama Administration failed to provide a plan for reforming Fannie and Freddie.
If that hearing doesn’t terrify you, see Ben Bernanke live here before the Joint Economic Cmte suddenly acknowledging we have a serious fiscal crisis and need immediate action, funny he didn’t say that before they rammed down the Obamacare bill huh? frakker.
James Lockhart (Dubyahs head of FHFA) of all people calls for principal reductions on CNBC this morning and Barney Frank D-MA said it will not happen..Through the Looking Glass…
James Lockhart, former head of the Federal Housing Agency, told CNBC Tuesday that he wants more generous mortgage modifications, including principal payment reductions.
…Although the latest Case-Shiller Index indicates the housing market has been improving for the last five months, there could be another spike in foreclosures, said Lockhart. While banks and investors have already marked down mortgages on their books, he said, that benefit has not yet been passed onto homeowners….
…“We still haven’t seen the falloff in foreclosures,” he said. “All the solutions have been on the income-side, and people’s balance sheets are suffering. It’s coming to the point where I think we really have to consider much more aggressive [loan modifications and] at looking at reducing principals.”
Lockhart also expects strategic defaults will start to occur more frequently. “You look at the bankruptcy numbers; the stigma is not there anymore,” he said….
…Representative Dennis Kucinich, an Ohio Democrat who was an early opponent of Obama in the 2008 presidential race, thinks the move is backdoor way to help banks, and a congressional subcommittee he leads is investigating the Treasury’s decision to cover unlimited losses at the housing finance companies.
“This new authority must be used responsibly and for the benefit of American families,” Kucinich said. It “cannot be used simply to purchase toxic assets at inflated prices, thus transferring the losses to the U. S. taxpayers and acting as a backdoor TARP.”
That’s exactly what Treasury is doing, says Dean Baker, co-director of the Center for Economic Policy Research in Washington. “This looks like the original TARP,” Baker said, referring to $700 billion financial rescue fund, known officially as the Troubled Asset Relief Program.
Waxman and Issa also ‘concerned’
…Kucinich is not the only one on Capitol Hill up in arms. House Energy and Commerce Committee Chairman Henry Waxman, a California Democrat, said he doesn’t like the idea of a “blank check” for Fannie and Freddie.
And Darrell Issa, the top Republican on the House Oversight and Government Reform Committee, called it “a continuation of the bailout policies that have mortgaged away the future solvency of our country.”…
Update 3: CSPAN will have the hearing up later at this linky. Three panels included the following:
The House Financial Services Committee held a hearing titled, titled “The Private Sector and Government Response to the Mortgage Foreclosure Crisis.” Panel One * Ms. Molly Sheehan, Senior Vice President, Chase Home Finance * Mr. Jack Schakett, Risk Management Executive, Credit Loss Mitigation Strategies * Ms. Julia Gordon, Senior Policy Counsel, Center for Responsible Lending * Dr. Anthony B. Sanders, Distinguished Professor of Real Estate Finance, Professor of Finance School of Management, George Mason University * Ms. Laurie Goodman, Senior Managing Director, Amherst Securities, LLP * Mr. Bruce Marks, Neighborhood Assistance Corporation of America Panel Two * The Honorable Herbert M. Allison, Jr., Assistant Secretary for Financial Stability, U.S. Department of the Treasury * Mr. Michael H. Krimminger, Special Advisor for Policy, Office of the Chairman, Federal Deposit Insurance Corporation * Mr. Douglas W. Roeder, Senior Deputy Comptroller Large Bank Supervision, Office of the Comptroller of the Currency
Update 2: WSJ has some highlights. The Banks should pay attention, b/c TheHill is reporting the judicial modification aka cramdown bill is back, this time in the regulatory reform bill.
House Financial Services Chairman Barney Frank (D, Mass.) harshly criticized the Obama administration’s efforts to keep people in their homes.”We have a great frustration with the failure of the combined efforts of elements of the federal government to make a substantial impact on the foreclosure crisis,” Mr. Frank said in opening remarks at a hearing before his panel Tuesday on lender and government responses to soaring foreclosures.
…Critics have ratcheted up attacks on the administration’s Making Home Affordable Program, which they say is ill-suited to address what they contend are the current causes of spiking foreclosures: negative equity, high unemployment and a wave of resets on complex mortgages that are difficult to modify. The program relies on hefty incentives for servicers to lower borrower payments to 31% of income.
…Executives from J.P. Morgan Chase & Co. and Bank of America Corp. testified that the banks were struggling to move borrowers into permanent loan modifications because eligible borrowers weren’t submitting the required paperwork….
Moderate in the Middle 