Free Republic

President Barack Obama is proposing to overhaul the nation’s mortgage finance system, including shutting down government-backed Fannie Mae and Freddie Mac—a plan with bipartisan support on Capitol Hill. Obama will also insist that popular 30-year mortgages be widely available to borrowers, even in a system that would rely more on the private sector than the government to guarantee loans. The president was to outline his proposals Tuesday at a construction company in Phoenix, once the epicenter of the housing crisis following the 2008 economic collapse. The housing market in the region, as in much of the country, has rebounded in...

An alleged "worst case scenario" shows the FHA could lose as much as $115 Billion. Since these worst case scenarios are always famously optimistic, the best course of action would be to shut the agency down. I was quoted as saying just that by the Heartland in Congressional Report Raises Spectre of FHA Bailout. The Federal Housing Administration's (FHA) losses over the next 30 years could be much higher than originally projected, according to the findings of a congressional committee. The dismal forecast has some bracing for another taxpayer-financed bailout. The House Oversight and Government Reform Committee, chaired by Rep....

Fannie And Freddie Are Getting Smoked — Down 40% Today Sam Ro May 29, 2013, 11:48 AM Shares of Fannie Mae and Freddie Mac are getting destroyed today. Stifel Nicolaus' Dave Lutz points us to reports that Senator Bob Corker will push to wind down Fannie and Freddie as part of housing finance reform. Fannie and Freddie are government sponsored enterprises (GSE) that were created to boost liquidity in the mortgage markets buy packaging mortgages and selling them off to investors as bonds (or mortgage-back securities). These MBS also came with implicit guarantees, which got the them into trouble when...

Mel Watt, President Obama’s nominee for director of the Federal Housing Finance Agency, pushed government programs to help welfare recipients buy homes during the creation of the subprime mortgage bubble. Watt, a 20-year Member of Congress from North Carolina’s 12th district, also had a hand in programs allowing borrowers with poor credit to buy homes with no down payment. The American financial system was subsequently destroyed when millions of bad borrowers defaulted on their loans, setting off a market crash that wiped out nearly 40 percent of the net worth of Americans. In 2002, Watt teamed up with Freddie Mac...

Fannie Mae — the much-hated, government-backed entity that needed a massive bailout and gets accused of inflating the housing bubble -- just reported its biggest annual profit in history.From the announcement that came out this morning:Fannie Mae (FNMA/OTC) today reported annual net income of $17.2 billion for 2012 and quarterly net income of $7.6 billion for the fourth quarter of 2012, compared with a net loss of $16.9 billion for 2011. The improvement in the company’s full-year and quarterly net income was due primarily to improved credit results driven by a decline in serious delinquency rates, an increase in home...

"The biggest problem with Fannie Mae and Freddie Mac is that they are financial institutions with a social mission," said Tom Schatz, president of Citizens Against Government Waste. That social mission, critics say, is to heavily subsidize mortgages for people who don't meet sound lending qualifications. "Lower income homes have a tougher time paying mortgages and when the housing market started to go under, that was the first to go," Schatz said.

Yes, we have yet another government mortgage modification program. This makes the 15th government mortgage modification program to go along with HAMP, HARP, the Attorneys General Settlement and their various contortions. The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac will offer a new, simplified loan modification initiative to minimize losses and to help troubled borrowers avoid foreclosure and stay in their homes. Beginning July 1, servicers will be required to offer eligible borrowers who are at least 90 days delinquent on their mortgage an easy way to lower their monthly payments and modify their...

IN a perfect world, policy makers, legislators and concerned Americans would have spent the last few years conducting an honest dialogue about two important issues: how to resolve Fannie Mae and Freddie Mac, the government-owned mortgage finance giants, and how to create a housing finance system that would serve borrowers without imperiling taxpayers. But ours is an imperfect world, and discussions about these questions have taken place mostly behind closed doors in Washington. The rest of us Americans, who guarantee the mortgage market, have not been given much of a say. This is a pity because the future of housing...

Bartiromo Takes Frank to Task Over Lack of ’08 Financial Crisis Prosecutions • Frank: 'Individuals' should be prosecuted on Wall Street, will not say who Former Massachusetts Congressman Barney Frank (D., Mass.) advocated criminal prosecutions against “individuals” involved in the 2008 financial crisis and the subsequent collapse on Wall Street Friday on CNBC. Maria Bartiromo reacted incredulously to Frank’s refusal to name specific individuals who may have perpetrated criminal wrongdoing, accusing the former Congressman of playing populist politics by making specious allegations against the financial industry. Frank attempted to deflect the criticism by stating as Chair of House Financial Services...

In charges filed late Monday in Los Angeles federal court, the Justice Department said S&P gave high marks to mortgage-backed securities that later went sour, even though it knew they were risky. The government said S&P misrepresented the risks because it wanted more business from the banks. The case is the government's first major action against one of the credit rating agencies that stamped their seals of approval on Wall Street's mortgage bundles. It marks a milestone for the Justice Department, which has been criticized for failing to make bigger cases against the companies involved in the crisis. "Put simply,...

Neighbors and activists, who stood out in the bitter cold for more an hour on Wednesday morning to protest the planned eviction of Jeffery Solivan of 32 Edgemont St., cheered after hearing that Fannie Mae had canceled its action. The protest kicked off just before 8 a.m., initially with about a dozen people and grew to about 30 people when word came that the eviction was off. No date has been given for a new eviction. Solivan said he hopes something can be negotiated with the lender that will allow him to keep his home, in the Pine Point neighborhood....

WASHINGTON (Reuters) – President Barack Obama will name close aide Tom Donilon as his new national security adviser on Friday in a move that could have implications for the struggli

Policy-wise, this is an oldie but a goodie, I guess, even though we’re still spending tons of money on Freddie Mac and Fannie Mae more than four years after the crash. Wells Fargo CEO Robert Kovacevich can't believe that we haven't learned the lesson from 2008 and gotten the government out of the home mortgage industry, and tells CNBC's Squawk Box that the two organizations made that crash exponentially worse than it needed to be: CLICK ABOVE LINK FOR THE VIDEO Fannie Mae and Freddie Mac exacerbated the 2008 mortgage crisis, and that’s why the U.S. government should get out...

Angelo Mozilo In Star Wars, Obi-Wan Kenobi used an old Jedi mind trick on Stormtroopers to deflect them from their real quarry: “These aren’t the droids you’re looking for.” It worked.It looks as if another mind trick, well known in the Congress — delay and deflection — will now work to make Americans forget one of the biggest scandals of our time: the housing collapse that triggered the 2008 financial meltdown we are still suffering from. We shouldn’t just gaze over the fiscal cliff everyone else is scrutinizing; we should also examine the droids who helped set in motion our...

A new study from the widely respected National Bureau of Economic Research released this week has confirmed beyond question that the left's race-baiting attacks on the housing market (the Community Reinvestment Act

A new and extensive analysis of 2.4 million loans insured by the Federal Housing Administration in recent years shows a pattern of risky lending that could generate $20 billion in losses and harm thousands of the nation’s most vulnerable borrowers. By ignoring risks in loans it insured in 2009 and 2010, the study concludes, the F.H.A. is imperiling both borrowers and taxpayers who stand behind the agency. The analysis emerged less than a month after the F.H.A.’s auditor submitted a troubling report on the financial soundness of its insurance fund. In mid-November, the auditor estimated that the fund, which backs...

A government report finds median pay for nearly 2,000 senior managers at government-controlled Fannie Mae and Freddie Mac exceeded $200,000 last year. The Federal Housing Finance Agency, which oversees the two mortgage giants, also did an inadequate job monitoring pay, according to the report released Monday from the inspector general for the FHFA. The median figure means that half the managers received salaries above $200,000 and half received less. Compensation for senior managers at the companies cost about $455 million in 2011, according to the report. Taxpayers so far have paid roughly $170 billion to rescue Fannie and Freddie, which...

A new book offers an instructive lesson on the unhappy surprises caused by the government’s attempts to manipulate the housing market. James R. Hagerty’s new book, The Fateful History of Fannie Mae: New Deal Birth to Mortgage Crisis Fall, shows how hard it is for administrations throughout history to know what they are really doing in their political attempts to manipulate the housing market.As Hagerty explains, the Eisenhower administration, working through the Housing Act of 1954, tried to wean Fannie off the government’s credit and make it operate with private capital. It succeeded instead in creating the essence of the...

How about all those solutions to the housing crisis put forward by Obama and Romney during the debates? We actually should celebrate because there are no proposals. It was government manipulation of credit markets, social engineering, and GSE’s Fannie and Freddie that caused the housing collapse. The solutions implemented by the Obama administration only prove Reagan correct; the more the plans fail, the more the planners plan. Had the housing market been left alone to self-correct we could be well on the way to recovery. Not to be when the central planners and the central bankers have their arms up...

QE3 certainly has wreaked havoc on the agency mortgage-backed securities market. The Fannie Mae 30 year current coupon (rate to MBS investors on new Fannie MBS) spread over 10 year Treasures has gone NEGATIVE! As in -3.65 basis points. But if we compare the Fannie 30 year current coupon to 5 year Treasury yields, we have a positive yield spread of about 100 basis points. Meanwhile, Fannie Mae 3.5 MBS duration just went negative! So, The Fed’s QInfinity has really done a number on MBS yields … and risk. MBS investors may be lining up to dump agency MBS on...