Posted on 12/10/2010 9:11:20 AM PST by FromLori
Last week I interviewed an investor who buys foreclosed properties and rents them out long-term for solid returns. He claims that's the only way to right the housing market — get long-term investors to eat up the excess inventory. The biggest roadblock, however, is credit. Fannie Mae and Freddie Mac both limit the number of investor mortgages.
Multiple sources now tell me that the Administration, specifically over at the Department of Housing and Urban Development, is considering ways to get more investors into the housing market, possibly with the help of Fannie and Freddie. HUD would not confirm that, but Fannie Mae's chief economist Doug Duncan said it is definitely on the table both at HUD and at Fannie.
"We're certainly exploring the opportunities to expand that," said Duncan in an interview, cautioning, "the data in our own portfolio show that when you get to a certain number, like ten is the number we've chosen, if there's any default issue, all the loans go bad at the same time, so at the present time we have two mandates, one is to help provide liquidity and help with funding, but the second is to protect taxpayers as well."
(Excerpt) Read more at cnbc.com ...
Related..
What’s hot for 2011: Mortgage-backed securities?
http://finance.fortune.cnn.com/2010/12/09/what%E2%80%99s-hot-for-2011-mortgage-backed-securities/
Pimco Raises 2011 U.S. Growth Forecast Becasue of `Massive’ Stimulus
http://www.economicpolicyjournal.com/2010/12/pimco-raises-2011-us-growth-forecast-n.html
“The Fed effectively telegraphed its intentions to the Street before buying the bonds. Legendary money manager Bill Gross, who oversees more than $1.2 trillion at Pacific Investment Management Co. said last month during a television interview that part of his success over the last 18 months was due to buying securities in front of the Fed, and selling them to the Fed at a premium, allowing him to profit handsomely. Gross runs PIMCO’s $252.2 billion Total Return Fund.”
This isn't to protect the investors. This is to artificially boost prices so that the banks don't take a further hit.
Several problems.
1) 30% down payment required for investor properties
2) Renting them out to people with bad credit is risky
3) The houses won’t appraise so someone still has to take a hit.
If Fannie and Freddie will change the down payment requirements and agree to pay the difference in the appraised value and the outstanding loan amount this idea might work.
Biggest problem Taxpayers backing this crap again.
Rent seeking is a valid enterprise but it should be done with their own money not mine!
No wonder we’re in such shape!
That’s the whole problem the money ends up being ours and check this out...
Neel Kashkari Exercises In Rhetorical Hypocrisy: Asks If Government Can Handle Fall Out Of His Actions
Neel Kashkari, previously of Goldman Sachs, subsequently of TARP creation fame, and currently of PIMCO payroll generosity and Macroeconomic Advisors “expert network” insight, has penned a charmingly faux-heartfelt, and supremely hypocritical Washington Post op-ed in which he asks rhetorically whether “Washington can tackle the big economic issues?” Ironically these are precisely the same “issues” that have arisen as a result of none other than his very own decision to make moral hazard a global policy courtesy of his own TARP creation. It was also none other than the Washington Post’s own profile of Kashkari that explained the deep thought that went into the creation of the biggest Bernanke Put in history: “Seven hundred billion was a number out of the air,” Kashkari recalls….”It was a political calculus. I said, ‘We don’t know how much is enough. We need as much as we can get [from Congress]. What about a trillion?’ ‘No way,’ Hank shook his head. I said, ‘Okay, what about 700 billion?’ We didn’t know if it would work. We had to project confidence, hold up the world. We couldn’t admit how scared we were, or how uncertain.” So the next time Kashkari’s own boss at Pimco waxes philosophically on how it is that “the Fed is now the most brazen of all ponzi schemes” perhaps he can first get the advice of his own puppet whose own morally hazardous actions “held up the world.” And, by the way Neel, had the US government done the right thing, and not “held up the world” letting those who deserve to fail, actually fail, then there would be no need for Washington to tackle big economic issues - ironically the market would have long been able to fix said problems on its own. But thanks to your actions we will indeed watch in terror as the government continues its exercises in supreme central planning.
Now Iceland they told the bankers to go to H and they are doing fine now...
And then there is the little business of govt taxing a rental property a lot more than resident occupied.
To be a landlord today does not seem worth it. Even with these low prices. Ive looked into it, only because one of my childhood homes that I lived in is on the market. No matter how much I want to do it, I cant succumb to so much govt control over something that I would own and have to pay for. To me its all risk.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.