Posted on 09/19/2007 9:52:09 AM PDT by Hydroshock
Fannie Mae and Freddie Mac, the biggest sources of U.S. housing finance, can buy $20 billion more in subprime mortgages under rules unveiled Wednesday to help revive a market hindered by tighter lending standards.
The Office of Federal Housing Enterprise Oversight, the regulator for Fannie and Freddie, agreed to relax restrictions on the mortgage finance companies' investment holdings although it did not eliminate existing caps on those loan portfolios.
RELATED LINKS Mortgage Applications Up as Refinancing Picks UpCountrywide CEO Bullish, Asks Government to Do MoreVideo Survey: After the Surprise Rate Cut, Are CEOs Happy Now? The moves are meant to help Fannie Fannie MaeFNM 64.5 1.96 +3.13%
Quote | Chart | News | Profile | Add to Watchlist [FNM 64.5 1.96 (+3.13%) ] and Freddie Freddie MacFRE 61.61 2.09 +3.51%
Quote | Chart | News | Profile | Add to Watchlist [FRE 61.61 2.09 (+3.51%) ] "provide greater assistance to subprime borrowers and others who may have trouble refinancing their existing mortgages," OFHEO director James Lockhart said in a statement, adding that he will not allow "any major increases in the [investment] portfolio levels."
The regulator agreed to let both Fannie and Freddie buy more subprime loans and eased Fannie's investment limit to the level imposed on Freddie. OFHEO also agreed to eliminate some stringent bookkeeping measures that also constrained investments valued at a combined $1.4 trillion.
(Excerpt) Read more at cnbc.com ...
I hope y’all are loaded to the gills in stock, gold, oil, and commods because this is inflationary to the moon.
Isn’t this just going to get more people in more trouble?
How about we start thinking past Thursday and consider long-term solutions to long-term problems?
The joys of living in Ritalin-Nation.
While the greedy shyster loan officers, real estate agents, developers and builders party like he$$ with them while the taxpayer foots the bill again.
I posted when this manure hit the fan that Fannie and Freddie (i.e. the taxpayer) would end up being the holding pen for all the junk paper out there. After all, we have to cleanse the balance sheets of all those outstanding model american corporate citizens (JP Morgan, Lehman, Bear Stearns, Merrill, Goldman Sach and Citi).
My best guess is that it would have been better for the market to have taken care of this rather than have the already-troubled GSEs take this step.
“How about we start thinking past Thursday and consider long-term solutions to long-term problems?”
~Not going to happen in my lifetime.
As I said, you need to be nimble and try to stay ahead of the tsunami.
This will help people who can afford their mortgage debt if refinanced to a 30-year fixed at the GSE-backed rates, but can’t afford it at subprime rates. That’s not necessarily a bad thing.
However, this will only briefly prolong the misery of people who can’t afford their debt under any ordinary repayment terms, and only briefly hold home prices in markets where the marginal demand was supplied by people getting in totally over their heads.
The greater fiscal threat by far is the incredibly irresponsible hikes in the FHA limits and cuts in FHA credit requirements. Unlike Fannie and Freddie, the FHA is an explicit government guarantee. People in the “hopelessly screwed” category will fall over themselves to get into FHA-backed loans and the government will pay the bill when they default. Next victim will be the neighbors in places where their are lots of FHA repossessions, which is basically the signature leading indicator of blight.
Amendments'R'USA
$20bn is pretty modest.
That’s 100,000 mortgages of $200,000 each. Big deal, I heard that 100,000,000 houses are already in foreclosure. LOL!
Not really. Freddie and Fannie will not be buying subprime loans that couldn’t verify income.
The only real change in FHA guidelines allows for mortgage delinquencies as long as they were current prior to rate adjustment. Which really is a sensible thing as long as the new FHA payment mirrors their original one and not the adjusted, higher one.
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