Posted on 01/24/2012 7:31:18 AM PST by Kaslin
Fannie Mae and Freddie Mac have already cost US taxpayers over $200 billion. If Obama gets his way on mortgage writedowns, the GSEs estimate it would take another $100 billion.
Since such estimates are always overly-optimistic by a factor of 3 to 10, I estimate the cost to taxpayers would be $300 billion minimum.
Please consider Fannie, Freddie writedowns too costly: regulator
Calculating the Maximum CostThe regulator for Fannie Mae and Freddie Mac told lawmakers that forcing the two mortgage firms to write down loan principal would require more than $100 billion in fresh taxpayer funds.
In a letter sent on Friday to the Republican and Democratic leaders of a House of Representatives government oversight panel, the Federal Housing Finance Agency explained why it has long opposed principal reductions for borrowers who owe more than their homes are worth.
It said it had determined that such reductions would be more costly for the two firms than allowing those troubled borrowers to default.
"Principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure," FHFA's acting director, Edward DeMarco, wrote in the letter to lawmakers dated January 20.
About 22 percent of U.S. homes have negative equity totaling about $750 billion, according to CoreLogic.
"Given that any money spent on this endeavor would ultimately come from taxpayers and given that our analysis does not indicate a preservation of assets for Fannie Mae and Freddie Mac substantial enough to offset costs, an expenditure of this nature at this time would, in my judgment, require congressional action," DeMarco said in the letter.
Another barrier to principal writedowns, aside from pushing losses at the two firms even further, DeMarco said, was the costs associated with new technology and training to servicers that would be needed to launch a program that offers principal forgiveness.
The Federal Reserve, in a white paper to Congress earlier this month, said write-downs "had the potential to decrease the probability of default" and "improve migration between labor markets."
However, the Fed stopped short of endorsing such an initiative and noted concern that writing down loan balances would create a moral hazard -- the concept that rescue efforts breed further behavior that exacerbates the existing problem -- and could prompt other borrowers to stop making timely loan payments.
What this election needs is a politician running on a platform to force government to make good on retail’s “investment” losses.
The Obama school of business is located at any city dump.
Fannie and Freddie - more scams on the US Taxpayers. Cut off ALL Taxpayer $$$ to both organizations, and sell them off.
For those with an iPhone - the Obama Clock:
http://itunes.apple.com/us/app/obama-clock/id445326700?mt=8
Why do Conservative candidates never point out that private citizens who bought stock in Fannie and Freddie have lost $125 billion?
That’s twice as much as Enron, which lost $60 billion.
Yet, 10 years after the Enron collapse, Conservatives still allow the Hard Left to assault us with that issue.
We have the ideal counter punch...
“Government Greed” cost American investors $125 billion.
But Conservatives say nothing.
Sorry, no link.
But that video sounds awesome!
Please post if you find it.
This is how Obama will get re-elected.
The country is doomed if that comes true
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.