Posted on 08/24/2007 9:06:12 AM PDT by Hydroshock
WASHINGTON (MarketWatch) -- The chairman of the Senate Banking Committee is urging the Bush administration to push through changes in a federal housing program that he says could help save troubled borrowers from foreclosure on their homes.
In a letter to Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson, Sen. Christopher Dodd, D-Conn., said the U.S. is experiencing record foreclosures and that it's "essential" that the Federal Housing Administration act to preserve homeownership for as many Americans as possible. The administration is studying the idea of allowing the agency to refinance troubled loans, something it's not allowed to do now. "I want to urge you to move expeditiously in this direction by making any administrative changes to the program that are needed to achieve this worthy goal while making sure that the long-term solvency of the FHA fund is not compromised," wrote Dodd on Thursday. The Connecticut Democrat is seeking his party's nomination for the White House and has said reforming the FHA will be one of his top priorities when Congress returns from its August recess. He has also called for the White House to allow Fannie Mae (FNM:Fannie Mae News, chart, profile, more Last: 66.79-1.34-1.97%
11:46am 08/24/2007
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: FNM66.79, -1.34, -2.0%) and Freddie Mac (FRE:Freddie Mac News, chart, profile, more Last: 63.64-0.40-0.62%
11:46am 08/24/2007
Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: FRE63.64, -0.40, -0.6%) to buy more mortgages and package them into securities, a move advocates say would free up lending liquidity. Such pleas from Dodd and other Democrats have been rejected, but the federal agency overseeing the two companies has left the door open for future action.
(Excerpt) Read more at marketwatch.com ...
better to bailout the homeowners than foreclose on the average guy and bail out the mortgage companies anyway/.
More screams for a banker bail out.
Unconstitutional (no Constitutional authority for the FHA or the federal government to be a guarantor of home loans) federal government intervention in the market...ostensibly to prevent a necessary market correction of conditions created since the credit bubble created by the Fed from and after the beginning of 2001 when the Fed intervened to “stop” the market correction tech bust.
Virtually all of the federal government today (both Democrats and Republicans) are modern-day descendants of FDR-type socialism and the naive and arrogant opinion that the government can outsmart the market...watch how both parties continue to push the Fed to pump money in the market to prevent a stock slide and inevitable recession and watch how both parties will create new federal programs and spend billions to “help” homeowners keep homes they could never afford
The markets will ultimately prevail...and government intervention and government (i.e. taxpayer) bailouts and government manipulation of the money supply...will all only delay the inevitable ugliness...and only make it worse when it eventually happens
Nice of Dodd to join the party — the Bush Adminstration has had a FHA modernization bill for 5 years and it has gone nowhere. Dodd is too busy running for President to actually pay attention to what is going on in the industries his committee is supposed to be overseeing. Now that there is a crisis and he can get some headlines he is blaming eveything on the Administration.
Dodd is also a Senator from Connecticut...home to many hedge funds and even more hedge fund managers and bankers...many heavily invested in mortgage-backed investments
The government is not guaranteeing these loans with government funds. FHA is basically a nonprofit mortgage insurance company. Lenders and borrowers pay premiums for the loans to be insured against default. The FHA insurance fund has never run a deficit and in fact usually runs a surplus that helps HUD meet its budget. It does not insure crazy loans like 2/28 ARMs and does not allow lending on stated income. The FHA is conservative about paying claims and is a vigorous regulator of its approved lenders. Lenders that submit fraudulent claims or failed to follow FHA guidelines when originating the loians can have their claims denied and can be disbarred from the program. It’s actuially a pretty good model for how the mortgage business ought to run going forward.
You got it, ux! Government intervention in this mess will only serve to make the whole thing messier!
Besides, the government is trillions of dollars in debt. What does it know about finance anyway? Answer: Not much.
UH??? Didn’t the current President Push for this a few years ago, with the dimwits doing notting, Herr Commendant!@
Dodd is a lightweight. He hasn't done anything yet because he is too dumb to know what to do. His staff isn't too bright either. So they hit on the idea of making this a political issue and blaming the Fed, the bank regulators, and HUD for the mortgage mess.
110th; applesonly5cents; breadlines; depression; despair; doom; dustbowl; grapesofwrath;
The Admin moderators can put a stop to it. If they want to.
Did Dodd think this up over his waitress sandwich at lunch?
Only a greedy scumbag bastard would make a home loan to somebody with “undocumented” income.
Is there any question that will change?...I would not be at all surprised if the reforms Dodd is talking about will dramatically loosen standards for FHA loans...to address the plight of all these poor souls who were "tricked" into taking nothing down, interest only loans from private lenders of course
We have an FHA loan and I would be happy if they took away the monthly *handling* fee.
1st: the "average guy", the "average" recent-homeowner is not in danger of foreclosure.
2nd: as it is now, not even a majority of sub-prime mortgages are in or approaching default status.
3rd: those (sub-prime) mortgage-holders that are in or near default status are most likely in financial positions where, in the final analysis, the added total cost of their interest portion of their mortgage (achieved when the rate is lowered but the length of the term is extended) will not put them in a position to have positive (appreciation) gains when they sell the house (the cost to pay off the mortgage grows with the additional interest that the time-factor produces). For many of the worst off cases (in the riskiest markets with the worst credit and least down payments) they will in the end be no better off than had they gone back to renting, with less monthly payments for housing and some margin of ability to save.
4th: Foreclosures of "prime" mortages, in the current situation, are not outside historical (and cyclical) norms (they go down when the/a national/regional house market is booming and go up when the/a national/regional house market is slowed or slowing).
The best thing that Congress can do is to stay damn well out of the issue and let time and the housing and financial markets work things out. If someone in a "subprime" situation is in or near default and is in fact financially worthy of getting their mortgage renegotiated, then they, and everyone like them, constitute a market opportunity that - if allowed to be explored ON THE ECONOMIC/FINANCIAL MERITS ALONE - will in fact find a positive response somewhere among our financial institutions, without any act/tax-break/subsidy from Congress.
Those who could never otherwise get their sub-prime mortgages renegotiated anyway, because they lack financial merit to do so, will be better off going back to renting (and doing so in a way that they are NOT living beyond their means), to provide some measure for savings - and in time that can place them in a better position to enter the house-buying market later on.
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