Feds rethink policies that encourage home ownership
08-12-2010, 01:59 PM
#1
Moderator Alumnus
Thread Starter
Feds rethink policies that encourage home ownership
Just how much should Uncle Sam do to help Americans buy their own homes?
For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes.
Now, policymakers are pausing to reconsider. In the next few months, they'll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.
The rethink could mean a shake-up for a mortgage market addicted to government subsidies.
"This process of figuring out the government's role is going to involve some hard choices," says Alyssa Katz, author of Our Lot: How Real Estate Came to Own Us. "The moment you start changing the nature of what is guaranteed by the government, what is subsidized, you start to change the alignment of winners and losers. ... We took for granted that anyone could get a mortgage."
Using guarantees and tax breaks, the government pushed homeownership past 69% in 2004. Then it all came crashing down.
Housing prices started crumbling in 2007, panicking financial markets, forcing the government to seize mortgage giants Fannie Mae and Freddie Mac, and pushing the economy into the worst recession since the 1930s. Homeownership has fallen below 67%.
Now, Washington is preparing to rebuild the national mortgage market atop the ruins of Fannie and Freddie. The proposal, due early next year from the Obama administration, could make it harder to buy a home by reducing available credit or requiring bigger down pay-ments. Low-income renters might get more government help.
Congressional Republicans doubt the administration has the nerve to make bold changes. They say the White House squandered an opportunity to deal with what they see as the No. 1 problem — limiting taxpayer losses on Fannie Mae and Freddie Mac — in an overhaul of financial regulations Congress passed last month. "What you've seen is two years of lip service," says Rep. Spencer Bachus of Alabama, ranking Republican on the House Financial Services Committee. "The administration and the congressional Democrats have not shown any willingness to address the issue other than to talk about it and have planning sessions."
Other critics say eliminating or overhauling Fannie and Freddie isn't enough: The government must reconsider such bedrocks of housing policy as the mortgage interest deduction and the tax exemption of most capital gains from home sales.
They say these misguided or outdated government policies encourage the United States to massively overinvest in housing, shortchanging other parts of the economy. "There's only so much subsidy to go around at the end of the day," Katz says.
The administration isn't tipping its hand in advance of a conference next Tuesday on housing finance reform in Washington. But officials insist that big changes are coming to housing finance. Treasury Secretary Timothy Geithner has said the reforms must: continue to make mortgage credit widely available; promote affordable housing for home buyers and renters alike; protect consumers from predatory lending; and promote financial stability.
"We have committed to having a proposal in place by early next year," says Federal Housing Administration Commissioner David Stevens. "This is not about delaying. This is about being thoughtful."
Policymakers are moving cautiously because the housing market is on government life support two years after the worst of the financial crisis. "Even today, private capital has not yet fully returned to this market," Jeffrey Goldstein, the Treasury Department's undersecretary for domestic finance, wrote recently. "Fannie Mae, Freddie Mac and other government entities guarantee more than 90% of newly originated mortgages. They are practically the only game in town." (In 2005, they accounted for just a third of the market.)
http://www.usatoday.com/money/econom...ing11_cv_N.htm (full article)
For 70 years — and for the last 15 in particular — the answer has been: Whatever it takes.
Now, policymakers are pausing to reconsider. In the next few months, they'll weigh whether there can be too much of a good thing when it comes to helping families finance the American Dream.
The rethink could mean a shake-up for a mortgage market addicted to government subsidies.
"This process of figuring out the government's role is going to involve some hard choices," says Alyssa Katz, author of Our Lot: How Real Estate Came to Own Us. "The moment you start changing the nature of what is guaranteed by the government, what is subsidized, you start to change the alignment of winners and losers. ... We took for granted that anyone could get a mortgage."
Using guarantees and tax breaks, the government pushed homeownership past 69% in 2004. Then it all came crashing down.
Housing prices started crumbling in 2007, panicking financial markets, forcing the government to seize mortgage giants Fannie Mae and Freddie Mac, and pushing the economy into the worst recession since the 1930s. Homeownership has fallen below 67%.
Now, Washington is preparing to rebuild the national mortgage market atop the ruins of Fannie and Freddie. The proposal, due early next year from the Obama administration, could make it harder to buy a home by reducing available credit or requiring bigger down pay-ments. Low-income renters might get more government help.
Congressional Republicans doubt the administration has the nerve to make bold changes. They say the White House squandered an opportunity to deal with what they see as the No. 1 problem — limiting taxpayer losses on Fannie Mae and Freddie Mac — in an overhaul of financial regulations Congress passed last month. "What you've seen is two years of lip service," says Rep. Spencer Bachus of Alabama, ranking Republican on the House Financial Services Committee. "The administration and the congressional Democrats have not shown any willingness to address the issue other than to talk about it and have planning sessions."
Other critics say eliminating or overhauling Fannie and Freddie isn't enough: The government must reconsider such bedrocks of housing policy as the mortgage interest deduction and the tax exemption of most capital gains from home sales.
They say these misguided or outdated government policies encourage the United States to massively overinvest in housing, shortchanging other parts of the economy. "There's only so much subsidy to go around at the end of the day," Katz says.
The administration isn't tipping its hand in advance of a conference next Tuesday on housing finance reform in Washington. But officials insist that big changes are coming to housing finance. Treasury Secretary Timothy Geithner has said the reforms must: continue to make mortgage credit widely available; promote affordable housing for home buyers and renters alike; protect consumers from predatory lending; and promote financial stability.
"We have committed to having a proposal in place by early next year," says Federal Housing Administration Commissioner David Stevens. "This is not about delaying. This is about being thoughtful."
Policymakers are moving cautiously because the housing market is on government life support two years after the worst of the financial crisis. "Even today, private capital has not yet fully returned to this market," Jeffrey Goldstein, the Treasury Department's undersecretary for domestic finance, wrote recently. "Fannie Mae, Freddie Mac and other government entities guarantee more than 90% of newly originated mortgages. They are practically the only game in town." (In 2005, they accounted for just a third of the market.)
http://www.usatoday.com/money/econom...ing11_cv_N.htm (full article)
08-12-2010, 03:39 PM
#2
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I'm all for making potential homeowners put up or shut up.
Agree or not, a large part of the problem is a direct result of speculative homeowners thinking they could buy a home with little to no down payment and an interest only loan. Hell why not, homes never go down in value
Yes the mortgage company allowed it to happen but what ever happened to taking responsibility Mr/Mrs. homeowner?
Agree or not, a large part of the problem is a direct result of speculative homeowners thinking they could buy a home with little to no down payment and an interest only loan. Hell why not, homes never go down in value
Yes the mortgage company allowed it to happen but what ever happened to taking responsibility Mr/Mrs. homeowner?
08-12-2010, 03:51 PM
#3
The sizzle in the Steak
08-12-2010, 08:29 PM
#4
I feel the need...
Break up Fannie/Freddie/FHA into smaller pieces and auction them off. It would have to be done with an explicit guarantee of some percentage of outstanding debt and they could eventually morph into fully private companies which could then issue new equity.
Eliminate the mortgage interest deduction (along with simplified income tax code) and eliminate tax exemption of capital gains. I think this is how the Canadian model works along with mortgage debt being full recourse, Belzebutt can correct me if I'm mistaken.
The nesting instinct is strong and for those who intend to stay put and build roots in communities, the mentality to be an owner won't change.
Obviously, I am not King and the above will never happen.
08-14-2010, 07:08 PM
#5
I feel the need...
Rick Santelli Goes Off ... and Luxury NYC Condos Now Get FHA Backing
It's been a long while since we've done a Rick Santelli video. While some of his other blowups have been larger [Feb 19, 2009: Rick Santelli Speaks for the Silent Majority] [Feb 28, 2008: Rick Santelli is Quickly Becoming my Hero] , today's was more of a slow boil which grew over time. Basically he speaks for all of us sick of interference by the Fed and government in every form of life, and distorting markets to level that are barely recognizable. As I've been saying for years, we are dependent on big brother's drugs, and as we become more dependent the drug hits necessary are getting bigger and bigger. Which in turn makes it more "impossible" for Big Brother to remove himself. Which requires even more drugs. (as these economists demand) And so on and so forth......
08-14-2010, 10:44 PM
#6
Карты убийцы
If I were Queen:
Break up Fannie/Freddie/FHA into smaller pieces and auction them off. It would have to be done with an explicit guarantee of some percentage of outstanding debt and they could eventually morph into fully private companies which could then issue new equity.
Eliminate the mortgage interest deduction (along with simplified income tax code) and eliminate tax exemption of capital gains. I think this is how the Canadian model works along with mortgage debt being full recourse, Belzebutt can correct me if I'm mistaken.
The nesting instinct is strong and for those who intend to stay put and build roots in communities, the mentality to be an owner won't change.
Obviously, I am not Queen and the above will never happen.
Break up Fannie/Freddie/FHA into smaller pieces and auction them off. It would have to be done with an explicit guarantee of some percentage of outstanding debt and they could eventually morph into fully private companies which could then issue new equity.
Eliminate the mortgage interest deduction (along with simplified income tax code) and eliminate tax exemption of capital gains. I think this is how the Canadian model works along with mortgage debt being full recourse, Belzebutt can correct me if I'm mistaken.
The nesting instinct is strong and for those who intend to stay put and build roots in communities, the mentality to be an owner won't change.
Obviously, I am not Queen and the above will never happen.
Fixed. Don't be so modest, you are a wonderful fairy, but your idea is stupid.
Trending Topics
08-17-2010, 07:16 PM
#8
I feel the need...
Pimco's Gross Urges `Full Nationalization' of Housing Finance
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the U.S. should consider “full nationalization” of the mortgage- finance system as the Obama administration plots the revival of a market that was at the center of the 2008 credit crisis.
“To suggest that there’s a large place for private financing in the future of housing finance is unrealistic,” Gross said today at a U.S. Treasury Department conference in Washington. “Government is part of our future. We need a government balance sheet. To suggest that the private market come back in is simply impractical. It won’t work.”
Treasury Secretary Timothy F. Geithner and Housing and Urban Development Secretary Shaun Donovan gathered housing- industry stakeholders to seek advice as the administration prepares a housing-finance overhaul to be delivered in January. The position taken by Gross, whose firm is among the biggest holders of U.S.-backed mortgage debt, is at odds with industry and government officials who have urged a smaller federal role.
Geithner said the government must reduce its role in housing markets and ensure Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, won’t require future bailouts....
“To suggest that there’s a large place for private financing in the future of housing finance is unrealistic,” Gross said today at a U.S. Treasury Department conference in Washington. “Government is part of our future. We need a government balance sheet. To suggest that the private market come back in is simply impractical. It won’t work.”
Treasury Secretary Timothy F. Geithner and Housing and Urban Development Secretary Shaun Donovan gathered housing- industry stakeholders to seek advice as the administration prepares a housing-finance overhaul to be delivered in January. The position taken by Gross, whose firm is among the biggest holders of U.S.-backed mortgage debt, is at odds with industry and government officials who have urged a smaller federal role.
Geithner said the government must reduce its role in housing markets and ensure Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, won’t require future bailouts....
08-18-2010, 08:23 PM
#9
I feel the need...
Dem. Frank says abolish Freddie and Fannie
'They only question is what do you put in their place,' congressman says
http://www.msnbc.msn.com/id/38752549...s-real_estate/
WASHINGTON — Fannie Mae and Freddie Mac should be abolished rather than reformed as part of the Obama administration's planned overhaul of the government's role in housing finance, Rep. Barney Frank, chairman of the House Financial Services committee, said on Tuesday.
"They should be abolished," Frank said in an interview on Fox Business, when asked whether the mortgage giants should be elements in housing market reform. "They only question is what do you put in their place," Frank said.
The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, Frank said in the interview.
"There is no more hybrid private-public," the Massachusetts Democrat suggested. "If we want to subsidize housing then we could do it upfront and let the budget be clear about that."
Fannie Mae and Freddie Mac were government-sponsored enterprises, privately owned companies supported by the government, until the Bush administration took control of the companies in 2008 to save them from collapse......
"They should be abolished," Frank said in an interview on Fox Business, when asked whether the mortgage giants should be elements in housing market reform. "They only question is what do you put in their place," Frank said.
The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, Frank said in the interview.
"There is no more hybrid private-public," the Massachusetts Democrat suggested. "If we want to subsidize housing then we could do it upfront and let the budget be clear about that."
Fannie Mae and Freddie Mac were government-sponsored enterprises, privately owned companies supported by the government, until the Bush administration took control of the companies in 2008 to save them from collapse......
08-18-2010, 08:52 PM
#10
I feel the need...
U.S. Treasury, Morgage-Lenders Seek to Keep Government Role in Housing Fix
The Obama administration, looking to overhaul the U.S. mortgage-finance system, gathered support from lenders and the real estate industry for reducing, without ending, the government’s role in insuring loans.
A limited government backstop “has a lot of traction,” said Michael Berman, chairman-elect of the Mortgage Bankers Association, in a Bloomberg Television interview after a Treasury Department conference in Washington to discuss proposals. “At either of the extremes -- either a full nationalization or a full privatization -- we’re not in the mainstream.”
The Obama administration is seeking advice on how to rebuild a system at the center of the 2008 credit crisis. Some Republicans have sought to abolish Fannie Mae and Freddie Mac, the main sources of U.S. mortgage financing. Yesterday, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the U.S. should consider “full nationalization” of the system.....
A limited government backstop “has a lot of traction,” said Michael Berman, chairman-elect of the Mortgage Bankers Association, in a Bloomberg Television interview after a Treasury Department conference in Washington to discuss proposals. “At either of the extremes -- either a full nationalization or a full privatization -- we’re not in the mainstream.”
The Obama administration is seeking advice on how to rebuild a system at the center of the 2008 credit crisis. Some Republicans have sought to abolish Fannie Mae and Freddie Mac, the main sources of U.S. mortgage financing. Yesterday, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the U.S. should consider “full nationalization” of the system.....
08-19-2010, 06:57 PM
#11
I feel the need...
Are housing tax breaks in jeopardy?
Experts: They go to the wealthy, and U.S. can no longer afford them
http://www.usatoday.com/printedition...terstitialskip
WASHINGTON — Federal housing policy offers the wealthiest Americans billions in tax breaks without delivering much bang for the buck in increased homeownership, critics told government policymakers Tuesday.
"We aren't getting our money's worth," Mark Zandi, chief economist of Moody's Analytics, said at a government conference on reforming housing policy.
The government spent $230 billion last year to promote homeownership through tax breaks and spending programs. The biggest chunk — $80 billion — went toward the mortgage interest deduction, according to the Congressional Budget Office.
Michael Stegman, housing policy specialist at the MacArthur Foundation, said the mortgage tax break goes primarily to the wealthiest households. A study this year by the Tax Policy Center of the Brookings Institution and the Urban Institute noted that the mortgage deduction was worth just $91 a year to families earning less than $40,000 — and $5,459 a year to those making more than $250,000.
The government, seeking to overhaul the housing market after the collapse of mortgage giants Fannie Mae and Freddie Mac, is unlikely to touch the politically sacrosanct deduction anytime soon.
But analysts suggested that the government's debt — $8.8 trillion and growing — meant that housing subsidies might one day face the knife. "We can't afford it," Zandi said.
The U.S. homeownership rate (66.9%) is about the same as Canada's and is lower than Australia, Ireland, Spain and Britain's even though "these countries provide far less government support for homeownership," Michael Lea of San Diego State University wrote this year.
For now, the government is neck-deep in housing. Private money has fled the market in the wake of a housing-market meltdown. Fannie, Freddie and other government agencies have filled the gap, guaranteeing more than 90% of new mortgages.
"Without government guarantees, mortgage rates would be hundreds of basis points higher, resulting in a moribund housing market," said William Gross, managing director of bond fund Pimco. "We don't want government in the housing market, but it's a necessity."
Treasury Secretary Timothy Geithner told the conference "there's no clear consensus yet" on reforming the way mortgages are financed. He promised "fundamental change" in the way Fannie and Freddie do business: They used an implicit government guarantee to borrow cheap money and make big bets in the housing market. When their gamble went bad, taxpayers picked up the tab.
"We aren't getting our money's worth," Mark Zandi, chief economist of Moody's Analytics, said at a government conference on reforming housing policy.
The government spent $230 billion last year to promote homeownership through tax breaks and spending programs. The biggest chunk — $80 billion — went toward the mortgage interest deduction, according to the Congressional Budget Office.
Michael Stegman, housing policy specialist at the MacArthur Foundation, said the mortgage tax break goes primarily to the wealthiest households. A study this year by the Tax Policy Center of the Brookings Institution and the Urban Institute noted that the mortgage deduction was worth just $91 a year to families earning less than $40,000 — and $5,459 a year to those making more than $250,000.
The government, seeking to overhaul the housing market after the collapse of mortgage giants Fannie Mae and Freddie Mac, is unlikely to touch the politically sacrosanct deduction anytime soon.
But analysts suggested that the government's debt — $8.8 trillion and growing — meant that housing subsidies might one day face the knife. "We can't afford it," Zandi said.
The U.S. homeownership rate (66.9%) is about the same as Canada's and is lower than Australia, Ireland, Spain and Britain's even though "these countries provide far less government support for homeownership," Michael Lea of San Diego State University wrote this year.
For now, the government is neck-deep in housing. Private money has fled the market in the wake of a housing-market meltdown. Fannie, Freddie and other government agencies have filled the gap, guaranteeing more than 90% of new mortgages.
"Without government guarantees, mortgage rates would be hundreds of basis points higher, resulting in a moribund housing market," said William Gross, managing director of bond fund Pimco. "We don't want government in the housing market, but it's a necessity."
Treasury Secretary Timothy Geithner told the conference "there's no clear consensus yet" on reforming the way mortgages are financed. He promised "fundamental change" in the way Fannie and Freddie do business: They used an implicit government guarantee to borrow cheap money and make big bets in the housing market. When their gamble went bad, taxpayers picked up the tab.
08-22-2010, 06:39 AM
#12
I feel the need...
Housing Has a Home Without Fannie, Freddie
You are President Barack Obama, and your Summer of Recovery is looking like most lawns in the Northeast.
You succeeded in getting a financial reform bill through Congress, with many of the rules to be delivered in the future. But you have yet to address those malefactors of the mortgage market, Fannie Mae and Freddie Mac, which are bleeding cash -- almost $150 billion since the government seized them two years ago. What do you do?
1. Let Nancy Pelosi figure it out.
2. Let Barney Frank figure it out.
3. Appoint a blue-ribbon commission to come up with options.
4. Convene a conference featuring a big-name panel of experts, give it a lot of advance hype, and hold a public hearing where the panelists can look appropriately serious as they talk amongst themselves.....
You succeeded in getting a financial reform bill through Congress, with many of the rules to be delivered in the future. But you have yet to address those malefactors of the mortgage market, Fannie Mae and Freddie Mac, which are bleeding cash -- almost $150 billion since the government seized them two years ago. What do you do?
1. Let Nancy Pelosi figure it out.
2. Let Barney Frank figure it out.
3. Appoint a blue-ribbon commission to come up with options.
4. Convene a conference featuring a big-name panel of experts, give it a lot of advance hype, and hold a public hearing where the panelists can look appropriately serious as they talk amongst themselves.....
09-06-2010, 12:49 PM
#13
Moderator Alumnus
Thread Starter
The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.
Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.
As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.
“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”
The further the market descends, however, the more miserable one group — important both politically and economically — will be: the tens of millions of homeowners who have already seen their home values drop an average of 30 percent.
The poorer these owners feel, the less likely they will indulge in the sort of consumer spending the economy needs to recover. If they see an identical house down the street going for half what they owe, the temptation to default might be irresistible. That could make the market’s current malaise seem minor.
Caught in the middle is an administration that gambled on a recovery that is not happening.
“The administration made a bet that a rising economy would solve the housing problem and now they are out of chips,” said Howard Glaser, a former Clinton administration housing official with close ties to policy makers in the administration. “They are deeply worried and don’t really know what to do.”
That was clear last week, when the secretary of housing and urban development, Shaun Donovan, appeared to side with current homeowners, telling CNN the administration would “go everywhere we can” to make sure the slumping market recovers.
Mr. Donovan even opened the door to another housing tax credit like the one that expired last spring, which paid first-time buyers as much as $8,000 and buyers who were moving up $6,500. The cost to taxpayers was in the neighborhood of $30 billion, much of which went to people who would have bought anyway.
http://today.msnbc.msn.com/id/390221...ew_york_times/
Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.
As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.
“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”
The further the market descends, however, the more miserable one group — important both politically and economically — will be: the tens of millions of homeowners who have already seen their home values drop an average of 30 percent.
The poorer these owners feel, the less likely they will indulge in the sort of consumer spending the economy needs to recover. If they see an identical house down the street going for half what they owe, the temptation to default might be irresistible. That could make the market’s current malaise seem minor.
Caught in the middle is an administration that gambled on a recovery that is not happening.
“The administration made a bet that a rising economy would solve the housing problem and now they are out of chips,” said Howard Glaser, a former Clinton administration housing official with close ties to policy makers in the administration. “They are deeply worried and don’t really know what to do.”
That was clear last week, when the secretary of housing and urban development, Shaun Donovan, appeared to side with current homeowners, telling CNN the administration would “go everywhere we can” to make sure the slumping market recovers.
Mr. Donovan even opened the door to another housing tax credit like the one that expired last spring, which paid first-time buyers as much as $8,000 and buyers who were moving up $6,500. The cost to taxpayers was in the neighborhood of $30 billion, much of which went to people who would have bought anyway.
http://today.msnbc.msn.com/id/390221...ew_york_times/
09-06-2010, 08:49 PM
#14
Suzuka Master
09-08-2010, 06:31 PM
#15
I feel the need...
Subprime 2.0 Is Coming Soon to Suburb Near You
On the second anniversary of the bailouts of Fannie Mae and Freddie Mac, it’s now obvious that weak lending standards, serving the political interest of affordable housing for all, were the main reason for the nation’s mortgage meltdown.
But the government just can’t permit lending to anyone and everyone; it must insist on prudent judgment about who will repay and who will default. Not only will borrowers who lack a down payment, steady income, employment and a good credit history probably get into trouble -- surprise! -- but too much irresponsible lending also creates artificial demand for houses, driving prices into the stratosphere and, as we have just experienced, puts all homeowners at risk.
The same mistake occurred in 1929, when any investor could buy stocks on margin with as little as 10 percent down. Small wonder that after the crash the U.S. government instituted a margin requirement of 50 percent down.
Congress should apply the same principle to housing purchases, increasing the amount a buyer must put down and other safeguards to assure prudent lending. Congress refuses to do this. Why? Giving citizens cheap, easy housing is a great way to win votes, no matter what horrific repercussions ensue.....
But the government just can’t permit lending to anyone and everyone; it must insist on prudent judgment about who will repay and who will default. Not only will borrowers who lack a down payment, steady income, employment and a good credit history probably get into trouble -- surprise! -- but too much irresponsible lending also creates artificial demand for houses, driving prices into the stratosphere and, as we have just experienced, puts all homeowners at risk.
The same mistake occurred in 1929, when any investor could buy stocks on margin with as little as 10 percent down. Small wonder that after the crash the U.S. government instituted a margin requirement of 50 percent down.
Congress should apply the same principle to housing purchases, increasing the amount a buyer must put down and other safeguards to assure prudent lending. Congress refuses to do this. Why? Giving citizens cheap, easy housing is a great way to win votes, no matter what horrific repercussions ensue.....
09-23-2010, 06:36 PM
#16
I feel the need...
How to Get Housing off Government's Juice
In a year when angry voters are demanding a reduced government role in the economy, it is remarkable that most of the ideas for supplanting Fannie Mae and Freddie Mac are just imaginative ways of keeping government in the business of housing finance.
While the Obama administration has not yet outlined its own proposal, Treasury Secretary Timothy F. Geithner has already signaled that the government will continue to have a role.
This is pretty astonishing. One would think that something might have been learned from the recent past, when two New Deal ideas for government housing support -- the savings and loan industry and the government sponsored enterprises, Fannie Mae and Freddie Mac -- failed spectacularly. It cost taxpayers $150 billion to clean up the first and may cost more than $400 billion to resolve the second.
The same old arguments are being trotted out: without government support there can’t be a 30-year fixed-rate mortgage; interest rates in a nongovernmental system will make homes unaffordable; and inevitable disruptions in the credit markets may put a crimp in housing finance.
These bugaboos are mostly myths. A Google search reveals offers of 30-year fixed-rate jumbo mortgages -- loans too large to be bought by the GSEs and provided by private lenders without government support. Studies by Federal Reserve economists in 2006 found no significant reduction in mortgage rates because of Fannie Mae and Freddie Mac’s low-cost funding and secondary market activities.....
While the Obama administration has not yet outlined its own proposal, Treasury Secretary Timothy F. Geithner has already signaled that the government will continue to have a role.
This is pretty astonishing. One would think that something might have been learned from the recent past, when two New Deal ideas for government housing support -- the savings and loan industry and the government sponsored enterprises, Fannie Mae and Freddie Mac -- failed spectacularly. It cost taxpayers $150 billion to clean up the first and may cost more than $400 billion to resolve the second.
The same old arguments are being trotted out: without government support there can’t be a 30-year fixed-rate mortgage; interest rates in a nongovernmental system will make homes unaffordable; and inevitable disruptions in the credit markets may put a crimp in housing finance.
These bugaboos are mostly myths. A Google search reveals offers of 30-year fixed-rate jumbo mortgages -- loans too large to be bought by the GSEs and provided by private lenders without government support. Studies by Federal Reserve economists in 2006 found no significant reduction in mortgage rates because of Fannie Mae and Freddie Mac’s low-cost funding and secondary market activities.....
09-23-2010, 06:38 PM
#17
I feel the need...
Volcker Says Fixing `Broken' Mortgage Market Should Be Priority
The U.S. mortgage market is “absolutely broken” and changing the government’s role in housing must be a top priority, said former Federal Reserve Chairman Paul Volcker, an adviser to President Barack Obama.
There is “no ready-made, practical alternative” to the government’s role in the mortgage market through Fannie Mae and Freddie Mac, Volcker said in prepared remarks at a banking conference today in Chicago. Creating a new framework for the private mortgage market “is a matter of first priority,” he said.
The U.S. financial system has yet to be repaired, he said. “We know parts of it are absolutely broken like the mortgage market,” Volcker said at the 13th Annual International Banking Conference held at the Federal Reserve Bank of Chicago.....
There is “no ready-made, practical alternative” to the government’s role in the mortgage market through Fannie Mae and Freddie Mac, Volcker said in prepared remarks at a banking conference today in Chicago. Creating a new framework for the private mortgage market “is a matter of first priority,” he said.
The U.S. financial system has yet to be repaired, he said. “We know parts of it are absolutely broken like the mortgage market,” Volcker said at the 13th Annual International Banking Conference held at the Federal Reserve Bank of Chicago.....
10-14-2010, 11:21 AM
#18
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I'm all for making potential homeowners put up or shut up.
Agree or not, a large part of the problem is a direct result of speculative homeowners thinking they could buy a home with little to no down payment and an interest only loan. Hell why not, homes never go down in value
Yes the mortgage company allowed it to happen but what ever happened to taking responsibility Mr/Mrs. homeowner?
Agree or not, a large part of the problem is a direct result of speculative homeowners thinking they could buy a home with little to no down payment and an interest only loan. Hell why not, homes never go down in value
Yes the mortgage company allowed it to happen but what ever happened to taking responsibility Mr/Mrs. homeowner?
02-12-2011, 08:14 PM
#19
I feel the need...
Treasury Report Calls for Winding Down Fannie, Freddie
U.S. Treasury Secretary Timothy F. Geithner presented Congress with a set of options for weaning the $11 trillion mortgage market from its dependence on the government, while calling for changes to be phased in “responsibly and carefully” to avoid economic disruptions.
The report delivered today by Geithner and Housing and Urban Development Secretary Shaun Donovan presents three approaches for a future housing finance system. It calls for the government to shrink “and ultimately wind down” Fannie Mae and Freddie Mac, the bailed-out government-sponsored enterprises that helped fuel the housing bubble before being felled by investments in subprime mortgages.
The transition to a new housing-finance system will likely take five to seven years, Geithner said during a conference call with reporters.....
The report delivered today by Geithner and Housing and Urban Development Secretary Shaun Donovan presents three approaches for a future housing finance system. It calls for the government to shrink “and ultimately wind down” Fannie Mae and Freddie Mac, the bailed-out government-sponsored enterprises that helped fuel the housing bubble before being felled by investments in subprime mortgages.
The transition to a new housing-finance system will likely take five to seven years, Geithner said during a conference call with reporters.....
http://www.treasury.gov/initiatives/...e%20Market.pdf
02-14-2011, 06:17 PM
#20
I feel the need...
Administration proposals to overhaul federal housing role draw fire from left
The Obama administration's plan to overhaul the U.S. housing market drew fire Friday from some of the president's traditional allies, who argued that proposals in the newly released report could make it too costly for many Americans to buy a home.
But while consumer and civil rights groups broke with President Obama over the long-awaited white paper, the plan met with little objection - and even praise - from Republicans, who have pilloried the administration over its housing policies.
Senior administration officials offered a series of suggestions for scaling back the federal role in the housing market, which has been on government life-support since the mortgage meltdown three years ago. In the near term, the administration wants to require larger down payments and higher fees for home loans and reduce the number of borrowers getting government-backed loans. Beyond that, the plan calls for eliminating Fannie Mae and Freddie Mac and putting private financial firms at the center of the mortgage market.....
But while consumer and civil rights groups broke with President Obama over the long-awaited white paper, the plan met with little objection - and even praise - from Republicans, who have pilloried the administration over its housing policies.
Senior administration officials offered a series of suggestions for scaling back the federal role in the housing market, which has been on government life-support since the mortgage meltdown three years ago. In the near term, the administration wants to require larger down payments and higher fees for home loans and reduce the number of borrowers getting government-backed loans. Beyond that, the plan calls for eliminating Fannie Mae and Freddie Mac and putting private financial firms at the center of the mortgage market.....
03-30-2011, 10:52 PM
#21
I feel the need...
Godzilla Hedge Funds Fannie Mae, Freddie Were ‘Guaranteed to Fail’
Welcome back NuttyPro!
The Obama administration is proposing to wind down Fannie Mae and Freddie Mac, making the timing for this book -- by Viral V. Acharya, Matthew Richardson, Stijn Van Nieuwerburgh and Lawrence J. White -- opportune. Part primer, part policy prescription, the text explains in simple language what these entities are, how they got so big, and why we must fix them.
Fannie Mae and Freddie Mac were once a fairly minor presence in residential mortgages. As publicly traded companies, though, they expanded their market share, from 4.4 percent in 1970 to 41.3 percent at the time the financial crisis hit, the authors say.
By then, the two government-sponsored enterprises, or GSEs, held combined mortgage portfolios of $1.43 trillion plus $3.5 trillion in guarantees on mortgage-backed securities. They had morphed into Godzilla hedge funds with government backing, the authors say.....
Fannie Mae and Freddie Mac were once a fairly minor presence in residential mortgages. As publicly traded companies, though, they expanded their market share, from 4.4 percent in 1970 to 41.3 percent at the time the financial crisis hit, the authors say.
By then, the two government-sponsored enterprises, or GSEs, held combined mortgage portfolios of $1.43 trillion plus $3.5 trillion in guarantees on mortgage-backed securities. They had morphed into Godzilla hedge funds with government backing, the authors say.....
04-02-2011, 07:59 PM
#22
Burning Brakes
I don't think it's a good thing for everyone to own their own home. We need a significant percent of people to rent, because it encourages population job mobility. What we had during the recession is that a lot of people who lost their jobs couldn't move to where there were more opportunities because they owned homes with very little equity and couldn't sell them or they'd have to take a huge loss. So it took them much longer to find a job. I think something like 70% of Americans own homes? Same as in Canada. But in most western European countries it's more like 40-50% which is better. Of course the government wants higher rates of home ownership because then they can collect more taxes.
04-03-2011, 01:36 AM
#23
I don't think it's a good thing for everyone to own their own home. We need a significant percent of people to rent, because it encourages population job mobility. What we had during the recession is that a lot of people who lost their jobs couldn't move to where there were more opportunities because they owned homes with very little equity and couldn't sell them or they'd have to take a huge loss. So it took them much longer to find a job. I think something like 70% of Americans own homes? Same as in Canada. But in most western European countries it's more like 40-50% which is better.
Purely from an economic standpoint, home ownership stimulates the economy a lot more. People customize their houses, buy paint, decorations, outdoor grills, etc., that they simply would not/could not do to such an extent with rented properties. Also, the government collects taxes from rent too, it's just officially paid for by the landlord and dispersed via rent payments.
04-03-2011, 07:50 AM
#24
I feel the need...
Of course the government wants higher rates of home ownership because then they can collect more taxes.
A landlord will still own the property and taxes are higher than on homestead properties.
04-03-2011, 07:52 AM
#25
I feel the need...
The Fate of the Mortgage Monsters
Reviewed by Anthony Randazzo
When Massachusetts Rep. Barney Frank, a Democrat, began calling for the closure of Fannie Mae and Freddie Mac last year, it signaled the beginning of the end of the two mortgage giants. But Frank, the former patron saint of the two so-called government-sponsored enterprises, has done nothing to start the process of shutting down the GSEs, and Congress is just now starting to address the issue.
In Guaranteed to Fail, a quartet of New York University professors from its Stern School of Business focus on the "debacle of mortgage finance" that Fannie and Freddie helped create, and offer a plan for reform. In clear language, and with plenty of data to support their arguments, the authors provide a concise but comprehensive history of the GSEs—which alone makes their book worth reading.
They also demonstrate that Fannie and Freddie were indeed "guaranteed to fail" when they were launched as semi-private government-sponsored enterprises four decades ago. "If the government was Doctor Frankenstein," they write, "surely the GSEs were its monster. Born of a well-intentioned…goal of creating liquidity in the secondary mortgage market, these institutions morphed into typical profit-making firms with an important exception—the government served as the backstop for the majority of their risks." The lethal combination created moral hazard—risky behavior by institutions insulated from the consequences of that risk.
Government guarantees created an unstable mortgage market, underpricing risk and driving excessive investment in housing and mortgage-backed securities. The GSEs became a major cause of the housing bubble and subsequent economic collapse, with the resulting bailout costing taxpayers $150 billion so far—a tab likely to climb much higher......
When Massachusetts Rep. Barney Frank, a Democrat, began calling for the closure of Fannie Mae and Freddie Mac last year, it signaled the beginning of the end of the two mortgage giants. But Frank, the former patron saint of the two so-called government-sponsored enterprises, has done nothing to start the process of shutting down the GSEs, and Congress is just now starting to address the issue.
In Guaranteed to Fail, a quartet of New York University professors from its Stern School of Business focus on the "debacle of mortgage finance" that Fannie and Freddie helped create, and offer a plan for reform. In clear language, and with plenty of data to support their arguments, the authors provide a concise but comprehensive history of the GSEs—which alone makes their book worth reading.
They also demonstrate that Fannie and Freddie were indeed "guaranteed to fail" when they were launched as semi-private government-sponsored enterprises four decades ago. "If the government was Doctor Frankenstein," they write, "surely the GSEs were its monster. Born of a well-intentioned…goal of creating liquidity in the secondary mortgage market, these institutions morphed into typical profit-making firms with an important exception—the government served as the backstop for the majority of their risks." The lethal combination created moral hazard—risky behavior by institutions insulated from the consequences of that risk.
Government guarantees created an unstable mortgage market, underpricing risk and driving excessive investment in housing and mortgage-backed securities. The GSEs became a major cause of the housing bubble and subsequent economic collapse, with the resulting bailout costing taxpayers $150 billion so far—a tab likely to climb much higher......
04-04-2011, 07:13 PM
#26
I feel the need...
If we could turn back time...
Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown
http://www.youtube.com/watch?v=cMnSp4qEXNM&NR=1
http://www.youtube.com/watch?v=cMnSp4qEXNM&NR=1
04-07-2011, 08:02 PM
#27
I feel the need...
IMF Urges U.S. to Be Explicit on Housing Finance Guarantee
April 6 (Bloomberg) -- The U.S. should make explicit its guarantees of the housing-finance market and bring them fully onto the government balance sheet, the International Monetary Fund said in a report today.
The Washington-based agency said that “significant uncertainty and vulnerability” remain in the U.S. mortgage market, which will require government backing for securitized mortgages. It also called for the U.S. to press ahead with plans to phase out Fannie Mae and Freddie Mac, the government-backed mortgage companies that have been in conservatorship since 2008.
“The challenge will be to strike the right balance between delivering an appropriate level of government participation and discouraging another cycle of overinvestment,” the IMF said today in its Global Financial Stability Report. The fund welcomed the Obama administration’s housing-finance plan and said improvements in the U.S. housing finance system would bolster global stability.
The U.S. didn’t tackle tax deductions for mortgage interest in its housing plan, which the IMF said was a mistake. The deduction should be lowered or at least capped, IMF staff recommended in a press conference today.....
The Washington-based agency said that “significant uncertainty and vulnerability” remain in the U.S. mortgage market, which will require government backing for securitized mortgages. It also called for the U.S. to press ahead with plans to phase out Fannie Mae and Freddie Mac, the government-backed mortgage companies that have been in conservatorship since 2008.
“The challenge will be to strike the right balance between delivering an appropriate level of government participation and discouraging another cycle of overinvestment,” the IMF said today in its Global Financial Stability Report. The fund welcomed the Obama administration’s housing-finance plan and said improvements in the U.S. housing finance system would bolster global stability.
The U.S. didn’t tackle tax deductions for mortgage interest in its housing plan, which the IMF said was a mistake. The deduction should be lowered or at least capped, IMF staff recommended in a press conference today.....
04-07-2011, 08:10 PM
#28
Federal gov't does not have the balls to do what it takes to get us out of this massive debt.....and even if they DO do something, it's already too late to prevent the next 2 things in the housing market
1. further collapse of residental housing market
2. the imminent collapse of the commercial realestate market.
This will only be compounded by the soon to be massive inflation hit the US is going to see due to the government's inability to control their spending.
1. further collapse of residental housing market
2. the imminent collapse of the commercial realestate market.
This will only be compounded by the soon to be massive inflation hit the US is going to see due to the government's inability to control their spending.
04-14-2011, 06:28 PM
#29
I feel the need...
Putting the 'Own' Back In Homeowner
By allowing borrowers to write off the interest on their mortgages, the IRS is incentivizing homeowners to drag out their payments for years. There's a better way.
http://online.wsj.com/article/SB1000...440896056.html
By ARKADI KUHLMANN
If the financial crisis revealed anything about homeownership in this country, it's that "ownership" is too often a misnomer.
Since the crisis began, more than five million homeowners—people who thought they'd achieved the American Dream—have seen their houses reclaimed by lenders. Thirteen million more will be forced out by 2015. That's hardly the kind of security one associates with owning.
Government-backed financial institutions like Fannie Mae and Freddie Mac prop up a system in which homeowners can spend decades paying their mortgages, often with little money down. They go years without building significant equity in their homes, rendering them little more than glorified renters.
Not surprisingly, the idea that the government should get out of the mortgage business has lately taken hold in Washington. Sen. John McCain (R., Ariz.) and House Republican Conference Chairman Jeb Hensarling (R., Texas) recently introduced bills that would wind down government sponsorship of Fannie Mae and Freddie Mac within the next five years. In February, the Obama administration submitted to Congress its plan for backing out of Freddie and Fannie.
The idea of a country with no government-backed mortgages is frightening to some Americans. But shifting more mortgages to private banks, particularly smaller ones that are more likely to maintain relationships with their borrowers, does come with certain benefits. It could stabilize the home market and prevent another collapse like the one we're still recovering from.....
If the financial crisis revealed anything about homeownership in this country, it's that "ownership" is too often a misnomer.
Since the crisis began, more than five million homeowners—people who thought they'd achieved the American Dream—have seen their houses reclaimed by lenders. Thirteen million more will be forced out by 2015. That's hardly the kind of security one associates with owning.
Government-backed financial institutions like Fannie Mae and Freddie Mac prop up a system in which homeowners can spend decades paying their mortgages, often with little money down. They go years without building significant equity in their homes, rendering them little more than glorified renters.
Not surprisingly, the idea that the government should get out of the mortgage business has lately taken hold in Washington. Sen. John McCain (R., Ariz.) and House Republican Conference Chairman Jeb Hensarling (R., Texas) recently introduced bills that would wind down government sponsorship of Fannie Mae and Freddie Mac within the next five years. In February, the Obama administration submitted to Congress its plan for backing out of Freddie and Fannie.
The idea of a country with no government-backed mortgages is frightening to some Americans. But shifting more mortgages to private banks, particularly smaller ones that are more likely to maintain relationships with their borrowers, does come with certain benefits. It could stabilize the home market and prevent another collapse like the one we're still recovering from.....
06-02-2011, 08:02 PM
#30
I feel the need...
Fannie Mae’s Johnson Was ‘Pied Piper,’ Drove U.S. Off Housing Cliff
James A. Johnson cuts a powerful figure as he makes his way around Wall Street and Washington in horn-rimmed glasses.
He’s a man of prestige: vice chairman of private-equity firm Perseus LLC; head of the compensation committee at Goldman Sachs Group Inc. (GS); former adviser to Democratic presidential aspirants including, briefly, Barack Obama.
He’s also a “Pied Piper” who led the U.S. down the path to housing hysteria, to hear Gretchen Morgenson and Joshua Rosner tell it in “Reckless Endangerment,” a late though welcome book on a debacle that ejected millions of Americans from their homes and jobs.
You might be asking, “James A. Who?” Unlike Richard S. Fuld Jr., Johnson has hardly become a common synonym for excess and greed. Yet from 1991 through 1998, Johnson served as chief executive officer of Fannie Mae, the government-sponsored enterprise that some critics call “ground zero” in the subprime-mortgage explosion.
Morgenson, a New York Times columnist with a reputation for outing scoundrels, and Rosner, a housing analyst who called the bubble early, seek to connect the dots between Johnson’s tenure and the $2 trillion meltdown that followed. Though many observers have asserted that Fannie Mae and government meddling caused the disaster, this fast-paced, original narrative comes closest to making the case.....
He’s a man of prestige: vice chairman of private-equity firm Perseus LLC; head of the compensation committee at Goldman Sachs Group Inc. (GS); former adviser to Democratic presidential aspirants including, briefly, Barack Obama.
He’s also a “Pied Piper” who led the U.S. down the path to housing hysteria, to hear Gretchen Morgenson and Joshua Rosner tell it in “Reckless Endangerment,” a late though welcome book on a debacle that ejected millions of Americans from their homes and jobs.
You might be asking, “James A. Who?” Unlike Richard S. Fuld Jr., Johnson has hardly become a common synonym for excess and greed. Yet from 1991 through 1998, Johnson served as chief executive officer of Fannie Mae, the government-sponsored enterprise that some critics call “ground zero” in the subprime-mortgage explosion.
Morgenson, a New York Times columnist with a reputation for outing scoundrels, and Rosner, a housing analyst who called the bubble early, seek to connect the dots between Johnson’s tenure and the $2 trillion meltdown that followed. Though many observers have asserted that Fannie Mae and government meddling caused the disaster, this fast-paced, original narrative comes closest to making the case.....
06-03-2011, 02:52 PM
#31
07-06-2011, 06:51 PM
#32
I feel the need...
Housing Recovery Stymied With Government at Cross-Purposes
July 6 (Bloomberg) -- Sue Stamper, a business owner in Sacramento, California, wants to buy a home. After mortgage- financiers Fannie Mae and Freddie Mac imposed the strictest loan standards in more than a decade, she doesn’t qualify.
Pam Crawford of Lyon Real Estate is trying to sell a three- bedroom bungalow on Sacramento’s east side for $179,000, a third less than what it went for in 2004. She hasn’t found a buyer even after cutting the asking price by $10,000 two weeks ago.
The two women, who haven’t met, illustrate the deadlock crippling the U.S. housing market five years into the crash: While a record share of Americans want to buy homes, U.S. policies, often working at cross-purposes, are making it more difficult. Government-controlled Fannie Mae and Freddie Mac have boosted standards so high that some people previously considered prime borrowers no longer qualify. That’s limiting a real estate rebound that also has been damped by a state attorneys general probe into foreclosure practices and an Obama administration loan-modification program that has fallen short of expectations.....
Pam Crawford of Lyon Real Estate is trying to sell a three- bedroom bungalow on Sacramento’s east side for $179,000, a third less than what it went for in 2004. She hasn’t found a buyer even after cutting the asking price by $10,000 two weeks ago.
The two women, who haven’t met, illustrate the deadlock crippling the U.S. housing market five years into the crash: While a record share of Americans want to buy homes, U.S. policies, often working at cross-purposes, are making it more difficult. Government-controlled Fannie Mae and Freddie Mac have boosted standards so high that some people previously considered prime borrowers no longer qualify. That’s limiting a real estate rebound that also has been damped by a state attorneys general probe into foreclosure practices and an Obama administration loan-modification program that has fallen short of expectations.....
07-06-2011, 10:27 PM
#33
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Expecting people to police themselves on a macroeconomic scale is hopelessly naive IMO, but I'm not trying to pick a fight with you...tons of people believe this and use this argument. And even financially savvy people make stupid and reckless decisions even if they theoretically know better, usually out of greed. If history is any lesson, people will be as greedy and reckless as you allow them to be. Human nature.
Don't take on an interest only loan where the interest payment is in your upper budget range and not expect very bad things to happen.
Sorry but stupid is not an excuse. Tired of people trying to ask for forgiveness simply because they have no common sense. If it sounds too good to be true....
07-07-2011, 11:29 AM
#34
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Fannie is significantly lowering max loan amounts effective 10-1-2011. Some parts of CA, the amount is going down by $179,000, my market is -$23,000.
This is going to impact the high end price about -5% I think. Interest rates on jumbos are 40 basis points higher than fnma conforming.
My markets, new house construction is off by 90%. What little is being built is almost all targeted at the conforming mortgage threshold. Now we got a new threat. Also, no one takes into account that the markets may badly undershoot what should be the new equilibrium pricing
This is going to impact the high end price about -5% I think. Interest rates on jumbos are 40 basis points higher than fnma conforming.
My markets, new house construction is off by 90%. What little is being built is almost all targeted at the conforming mortgage threshold. Now we got a new threat. Also, no one takes into account that the markets may badly undershoot what should be the new equilibrium pricing
07-14-2011, 07:20 PM
#35
I feel the need...
Tax Break for Mortgage Debt Is Ready for the Wrecking Ball
Americans think differently about housing now: Developers have cut back on speculative projects and mortgage bankers view lending standards more soberly. Another important change in attitudes emerged this week when people were asked how they feel about giving up the ability to deduct mortgage interest from their personal income taxes.
Forty-nine percent of respondents in a Bloomberg National Poll said they were willing to abandon the mortgage tax break if it meant lower overall tax rates. Only 45 percent opposed the switch. That’s a sharp contrast with polling patterns of prior years, when the public showed 2-to-1 support for keeping the mortgage deduction. The Bloomberg poll of 1,000 adults conducted June 17-20 has a margin of error of plus or minus 3.1 percentage points.
This change in sentiment creates a rare opportunity to fix a tax-policy mistake that the American public and its political representatives have defended tirelessly. The case against the deduction is strong. It is costing the U.S. Treasury $104.5 billion this year. It showers most of its benefits on wealthy people in high tax brackets who were going to buy homes anyway, while offering too little for strivers in the lowest tax brackets.
Worst of all, this tax break makes taking on unsustainable levels of personal debt too attractive.....
Forty-nine percent of respondents in a Bloomberg National Poll said they were willing to abandon the mortgage tax break if it meant lower overall tax rates. Only 45 percent opposed the switch. That’s a sharp contrast with polling patterns of prior years, when the public showed 2-to-1 support for keeping the mortgage deduction. The Bloomberg poll of 1,000 adults conducted June 17-20 has a margin of error of plus or minus 3.1 percentage points.
This change in sentiment creates a rare opportunity to fix a tax-policy mistake that the American public and its political representatives have defended tirelessly. The case against the deduction is strong. It is costing the U.S. Treasury $104.5 billion this year. It showers most of its benefits on wealthy people in high tax brackets who were going to buy homes anyway, while offering too little for strivers in the lowest tax brackets.
Worst of all, this tax break makes taking on unsustainable levels of personal debt too attractive.....
07-15-2011, 09:45 AM
#36
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^ That and the other thing are enough to permanently break the back of the homeownership monster. We can raise generations of apartment renters, like Europe 
Elimination of the tax deduction is not unthinkable. House price declines on a national basis was previously unthinkable.
Elimination of the tax deduction is not unthinkable. House price declines on a national basis was previously unthinkable.
07-24-2011, 05:06 PM
#37
the US FEDERAL GOVERNMENT should not be in the mortgage business as it is not outlined in the US Constitution.
08-02-2011, 09:23 AM
#38
looks like the topic is back up for discussion around the reform or elimination of the MID...
http://www.mclaughlinquinn.com/blog/...est-deduction/
from a personal standpoint, i would greatly miss the benefit of seeing the deduction on my tax return... i am not sure how it may affect the already dying housing market though. albeit not a great incentive to encourage homeownership, real estate seems to need all that it can get...
http://www.mclaughlinquinn.com/blog/...est-deduction/
from a personal standpoint, i would greatly miss the benefit of seeing the deduction on my tax return... i am not sure how it may affect the already dying housing market though. albeit not a great incentive to encourage homeownership, real estate seems to need all that it can get...
02-22-2012, 05:11 PM
#39
I feel the need...
Envisioning a Future Without Fannie, Freddie
WASHINGTON—The U.S. is studying a single way to package home loans into securities as an interim step toward a system that could outlive Fannie Mae and Freddie Mac, mortgage-finance firms that have faced an uncertain future in the wake of the housing market's bust.
The Federal Housing Finance Agency, the federal regulator for Fannie and Freddie, on Tuesday said it is looking at the development of a system that could take the place of the proprietary ones of both companies.
The housing agency disclosed its thinking in a new 21-page strategic plan for Fannie and Freddie sent to Congress. Congress and the Obama administration have taken few steps toward deciding the fate of the housing giants.....
The Federal Housing Finance Agency, the federal regulator for Fannie and Freddie, on Tuesday said it is looking at the development of a system that could take the place of the proprietary ones of both companies.
The housing agency disclosed its thinking in a new 21-page strategic plan for Fannie and Freddie sent to Congress. Congress and the Obama administration have taken few steps toward deciding the fate of the housing giants.....
Contemplating Life After Frannie
For all the tough talk about getting rid of Fannie Mae and Freddie Mac, there is still no political will to change the broken, status quo of the housing-finance system. Thankfully, one regulator is at least willing to think about a day when there might be.
As things now stand, Fannie and Freddie continue to guarantee about three out of every four new mortgages originated, or about $100 billion a month. Other government programs account for almost all the remainder.
In the face of this, Fannie and Freddie's overseer, the Federal Housing Finance Agency, is contemplating new structures to hopefully prepare markets for whatever changes may ultimately come the mortgage giants' way. Its latest thinking, detailed in a paper released Tuesday, talks, among other things, about creating a single, utility-like platform for selling mortgages to investors.
This could help lead to the creation of a single government mortgage-backed security. Along with other moves under way to standardize mortgage data and improve transparency, this could help prepare for a return to securitization markets that sell bonds with no or only a partial government guarantee.....
As things now stand, Fannie and Freddie continue to guarantee about three out of every four new mortgages originated, or about $100 billion a month. Other government programs account for almost all the remainder.
In the face of this, Fannie and Freddie's overseer, the Federal Housing Finance Agency, is contemplating new structures to hopefully prepare markets for whatever changes may ultimately come the mortgage giants' way. Its latest thinking, detailed in a paper released Tuesday, talks, among other things, about creating a single, utility-like platform for selling mortgages to investors.
This could help lead to the creation of a single government mortgage-backed security. Along with other moves under way to standardize mortgage data and improve transparency, this could help prepare for a return to securitization markets that sell bonds with no or only a partial government guarantee.....
05-13-2012, 06:07 AM
#40
I feel the need...
FHA New Foreclosures Jump as Modified Loans Default
The number of Federal Housing Administration-insured home loans entering foreclosure jumped in March after half the mortgages it modified to ease repayment terms were in default again a year or more later.
The FHA’s role in lending to first-time buyers with poor credit and limited cash expanded after the 2008 collapse of the mortgage market put it at the center of government efforts to revive housing. The FHA allows down payments as low as 3.5 percent for borrowers with a credit score of 580, below the 640 defined as subprime by the Federal Reserve.
“The credit standards are way too loose -- you can get into a house with very little skin in the game, and if home prices drop by a small amount, you’re underwater,” said David Lykken, managing partner at Mortgage Banking Solutions, an Austin, Texas-based consulting firm. “We’ve got to start getting reasonable about standards. What they’ve done so far, some very slight attempts at tightening, doesn’t really count.”
An increase in FHA foreclosures may lead to further demands for stricter standards that could shut buyers out of the real estate market as it shows signs of stabilizing after a six-year slump.....
The FHA’s role in lending to first-time buyers with poor credit and limited cash expanded after the 2008 collapse of the mortgage market put it at the center of government efforts to revive housing. The FHA allows down payments as low as 3.5 percent for borrowers with a credit score of 580, below the 640 defined as subprime by the Federal Reserve.
“The credit standards are way too loose -- you can get into a house with very little skin in the game, and if home prices drop by a small amount, you’re underwater,” said David Lykken, managing partner at Mortgage Banking Solutions, an Austin, Texas-based consulting firm. “We’ve got to start getting reasonable about standards. What they’ve done so far, some very slight attempts at tightening, doesn’t really count.”
An increase in FHA foreclosures may lead to further demands for stricter standards that could shut buyers out of the real estate market as it shows signs of stabilizing after a six-year slump.....