Posted on 08/05/2010 6:39:02 AM PDT by Daisyjane69
Edited on 08/05/2010 6:53:02 AM PDT by Admin Moderator. [history]
James Pethokoukis hears rumors of an August surprise coming from the White House, one that will attempt to win backs the hearts and minds of voters dismayed at the failing economic policies of the Obama administration. With the government fully in control of Fannie Mae and Freddie Mac, Barack Obama may issue an order to forgive portions of underwater mortgages processed through the GSEs, where negative equity approaches $800 billion overall. Some financial houses have begun quietly preparing for the possibility:
Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages one in five are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obamas loan modification effort. HARP was just extended through June 30, 2011.
The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie.
You only own it until they decide you don’t. You are temporary the government is permanent. Of course we could wake up, but not in my life time.
Thank you
After I posted that, I noticed the others. I’m in good company.
Not sure why that would be, I was only answering a question. If it is about planning to use the equity in your home to help with the cost of living in your later years, I am in that boat as well. While I can't say that we viewed that growing pile of equity as an IRA and didn't save-invest elsewhere, I have to admit that some other purchase and investment decisions that we've made over the years was colored a bit by the progress of that growing pile of equity! At this point we are about down $300K or so from what we could have sold it for at the peak, and yeah, that fact and the strong possibility that it will sink even lower over time has certainly factored into our current spending levels and future plans. I am in the same boat as a lot of folks, and I know that some will scold us all for ever even thinking about that growing pile of equity as anything but an illusion created by an endless supply of fiat money.
If they do there should be a class action suit against the government by everyone that pays their debts!!!
No reductions, throw them out in the street!
This would be one way to get rid of a bunch of toxic debt on both sides of the ledger. But one way or another, much of this debt will not be paid back.
For now, deflation is winning.
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