Comments on: Fannie Mae demonizes the victims of the housing bust A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: hsvkitty Fri, 25 Jun 2010 00:16:58 +0000 I shake my head too. There are still people who enjoy their homes even more, knowing paying for it isn’t money with wings. (like monthly rental versus monthly payments)

I think Felix, you are feeling for those who can’t afford to make monthly payments but wish to keep their homes? Well in that case, if Fannie is not doing what they can, then you are right … they will make more problems.

But being they were referring to “Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith”, dang straight there should be something done to deter walking away/being able to get future loans it will be en masse zombie land once word gets round they can “do” that!

By: DanHess Thu, 24 Jun 2010 22:59:47 +0000 Felix, WCW —

Let’s keep in mind why Uncle Sam decided 70 years ago to subsidize homeownership.

The thing is, evidence over the previous several thousand years strongly suggested that renters filled the ranks of the underclass and were lorded over by the owning class. My guess is 100 years from now, and 500 years from now, the underclass will still consist largely of renters.

Felix, I’m sure its nice to sit on your chair-ball in your purple suit in your NY office and talk about the joys of renting but if you could go back two generations and chat with a sharecropper, you’d see some of the upside of ownership. It’s kind of ironic how you equate freedom with renting rather than with owning.

By: wcw Thu, 24 Jun 2010 22:27:35 +0000 @MattJ, yes, FNM technically is in conservatorship. Nonetheless, we fund it. Absent said funding, it would not exist. Hence, it is accurate to describe its policy as public policy.

As for GSE bondholders, that ship sailed with the conservatorship. I’d estimate the chances are higher that the preferreds starts paying dividends again than that we cram down bondholders for so much as a nickel.

By: MattJ Thu, 24 Jun 2010 20:54:41 +0000 wcw, we as taxpayers do not own Fannie and Freddie; we have agreed to guarantee their losses through the end of 2012 (iirc). I for one sincerely hope after that point we let the Fannie/Freddie bondholders take the losses they so richly deserve. Any politicians who agrees to back the full agency debt will be ending their career, and will deserve much worse than that.

By: y2kurtus Thu, 24 Jun 2010 20:38:27 +0000 Felix,

Wow… wow… wow… Fannie and Freddie’s sole goal… THE ONLY THING THEY NOW DO… is transfer wealth from tax payers to home buyers via an explicit subsidy that lowers the cost of borrowing.

And you’re problem is that they go after the deadbeats that don’t pay?

How about this Felix… let’s let the goverment keep artifically lowering the cost of home ownership… but lets also make it less dangerous for the tax payer. You frequently advocate raising capital standards for banks, (a GREAT idea!) How about we raise the capital standards for home owners… we’ve effectively gone from a requirement of 0-5% in 2007 to 20% down in 2010 (with a few exceptions for first time buyers and veterans.) Lets keep walking that number up gradually… 21% down in 2011, 22% in 2012 and so on until the required down payment for an agency backed loan is 25%.

That would not crush prices the way the massive move from no money down to 20% down did, it would keep prices from rising rapidly back to unaffordable levels, and it would even allow banks some room to think about offering a non-goverment backed option to consumers who had the 20% down but did not want to wait the extra year to save the final 5% needed to get to that goverment mandated 25%

Just remember that even post crash the value of Americans homes represents somethin like 75% of the total wealth in this country. Owning a home is a forced savings plan. Even if the rate of return is negitive you end up owning something of value at the end of 30years. Renters better be real diciplined with their 401k’s and IRA’s if you think they are going to come out ahead in th end!

Keep up the great writing!

By: Strych09 Thu, 24 Jun 2010 20:24:03 +0000 Mr.Do wrote:The first part is silly. There’s no point holding a grudge against people who did what they were entitled to do under the conditions of the loan.I don’t agree that it’s silly or that is just “holding a grudge”.

What it is, really, is not allowing somebody who strategically defaulted to do so again on the taxpayer’s dime. If the person is truly credit worthy and strategically defaulted on their previous mortgage, then of course when they want another loan they are free to get one from a private portfolio lender.

The principle is “Fool me once, shame on you; fool me twice, shame on me.”

By: wcw Thu, 24 Jun 2010 20:08:14 +0000 Fannie Mae collapsed insolvent, and we the taxpayers own it. Fannie Mae policy is public policy, not private enterprise. As a matter of public policy, I can think of a hundred things I would have FNM do before chasing these paltry few ducats.

@DanHess, I wish the government were spending $2 trillion per decade subsidizing my lifestyle, too. I salute you for your superior ability to leach from the public teat. Cf, those few who don’t know the numbers, page 33 of &id=3642

By: HBC Thu, 24 Jun 2010 20:01:02 +0000 Fannie Mae’s role in the economy is chiefly about federalizing the downside to bad bets made by private speculators – using taxpayer funds to pay them out at full pop. Which would be bad enough. But wait, there’s more…

When Fannie starts using federal muscle to remove en masse and without regard for specific circumstance those caught in the middle from the credit gene pool, forever, it’s a double whammy to free market economy principle: guaranteed to produce results which are, in the long run, overwhelmingly perverse.

It also lends credence to the tea party world view of what government can do when it sets its mind to it, namely carry the can for grand theft US Economy after the white-collar perps have had their way with it.

By: AABender1 Thu, 24 Jun 2010 17:59:00 +0000 Felix wrote:
“So when it comes to the problems of default and foreclosure, it’s crucial that Fannie Mae be part of the solution rather than part of the problem. Instead, it’s decided to get onto a self-defeating moralistic high horse.”

Why is the concept of ‘If you don’t pay me, I won’t lend to you again’ moralistic and not just pure capitalism and rational economics?

Oh, wait, it is capitalism and rational economics; it’s just oblique and further down your discussion:

“And the refusal to issue a new mortgage to these people for seven years is something of a blessing in disguise, since substantially all of these jingle-mailers will be better off renting anyway.”

Look, I don’t like Fannie anymore than the next guy. But creating penalties for violating financial contracts is an economically rational reaction to borrowers who don’t pay. You are now starting to see the ugly side of encouraging ‘jingle mail.’ And expect more.

By: Mr.Do Thu, 24 Jun 2010 17:44:12 +0000 The first part is silly. There’s no point holding a grudge against people who did what they were entitled to do under the conditions of the loan.

The second part about collecting money where the jurisdiction allows, is what any bank would do. I believe Felix is on the board of a credit union? What position do they take when people owe money they can afford to pay but don’t want to? I might be in the market for a loan!