January Surprise: Is Obama preparing a trillion-dollar, mass refinancing of mortgages?

The American Enteprise Institute ^ | January 4, 2012 | James Pethokoukis

[Gene Eric]

The guy’s hellbent on enslaving the generations ahead.

[combat_boots]

I don’t think this is about mortgages. I think this is about government takeover of land. It’s a form of nationalization and confiscation.

[silverleaf]

then eHow at my link is wrong and you should write and correct them

I was merely tyring to clarify the acronym GSE the author of the article used but never defined

[CharlesWayneCT]

But that is a different matter, really. In my prior case, I was refinancing with the same mortgage company. They did not do an appraisal, they did not do a credit check, and they didn’t have a loan officer involved. It really cost them nothing.

They sent me a 3-page form to fill out, I filled it out and notarized it, and mailed it back.

Now, it could be that I didn’t get the absolutely lowest rate I could. I wasn’t worried about it, because it cost me nothing, so I was saving a lot of money on my interest payments and I could always refinance again if I found a lower rate.

My point was that I did the exact same thing after Obama. I went to my existing mortgage company, and asked them to simply refinance my existing mortgage for the same amount. BUT, because of the new regulations designed to “protect” me, the lender needed to do a new appraisal, a new credit check, and a new title search. They had over a dozen forms that had to be filled out and filed with the federal government. They had a dedicated loan officer who had to come to my house and do a formal closing. All of that cost a lot of money, wasted money.

After all, they already had my loan. They knew my history, they knew the value of my house, they already had the risk. They didn’t need ANY of those checks, although those checks certainly did give them a slightly better idea of my current circumstances. But as a business, they weren’t interested in that new information. They needed it only because of government regulation.

Because of that, in retrospect I figured out that I could have gotten a cheaper deal by switching companies, since others have a more streamlined process and can charge less. There was absolutely ZERO advantage to me working with my existing lender, because they had to treat me as a new customer anyway.

Worse, even though my loan was for less than half of the assumed appraised value of my house, they couldn’t even to a drive-by appraisal, they had to send the appraiser into the house.

I still came out ahead, but just barely; the only reason I still went through with it was to get money out of the house for a college loan (because Obama took that over as well, so my home mortgage was a LOT cheaper interest than a college loan would have been, AND it was deductable because I was still below the original loan amount).

[wolfman23601]

Or people who had the credit to run their mortgage through a private bank anf not Fannie/Freddie...

[varon]

2. The typical borrower would reduce his or her principal and interest payments by about $350 dollars, a total reduction in mortgage payments of nearly $100 billion per year.

The $350 savings, taken in the context of this statement, would be an annual savings at $29.17 per month.

Now, who in his right mind is going to lose control of their bowels over $29.17 savings per month???

[Pelham]

That eHow article is indeed wrong. I’m more surprised when someone gets the facts right regarding Fannie and Freddie.

The government agencies that do insure loans are the FHA, the VA, HUD, and some farm related loans with the Ag Dept. Ginnie Mae deals only in this insured paper, so although it doesn’t do the insuring itself its product is gov’t insured.

Ginnie Mae is a government owned corporation, as opposed to being government sponsored like Fannie and Freddie. People assumed that Fannie and Freddie were guaranteed like Ginnie Mae but they weren’t, not that it turned out to make any difference.

[neverbluffer]

I agree with your statement:

“I went to my existing mortgage company, and asked them to simply refinance my existing mortgage for the same amount. BUT, because of the new regulations designed to “protect” me, the lender needed to do a new appraisal, a new credit check, and a new title search”

The new mortgage laws have certainly screwed consumers, not helped!

[silverleaf]

Then this Reuters article is also wrong, for it also defines Fanny and Freddy as “GSE’s”

http://www.reuters.com/article/2012/01/05/us-usa-fed-housing-idUSTRE8031SE20120105

FEW TOOLS

Fannie and Freddie, government-sponsored enterprises (GSE) that are chartered by Congress, buy loans from lenders and repackage them as securities for investors, which they then guarantee. The aim is to provide a steady source of funds for the mortgage market.

[CSM]

“That would certainly piss off the people who have been diligent about paying their mortgages.”

Just rewarding poor decisions while punishing frugality and maturity. What do you expect from marxists? ;-)

[Pelham]

“Then this Reuters article is also wrong, for it also defines Fanny and Freddy as “GSE’s””

No, it’s not wrong. That part is correct, they are GSEs. The two firms were created by the government before they were spun off to private investors.

Where the other article erred was in stating that the securities sold by the GSEs were insured by the government. Those securities had no such guarantee, or at least they didn’t until the Bush administration decided to invent a guarantee out of thin air and stuck the taxpayer with the bill.

[Ronaldus Magnus]

A prophetic article. This is almost passed socialism. We need a new word.