"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"
Posted by pthoreson on 5th of Aug 2010 at 03:29 pm
Stay calm.....
WASHINGTON(MarketWatch) -
Government officials on Thursday rejected speculation that they had
any plans to conduct a massive mortgage refinancing program to
stimulate the economy, according to the Wall Street Journal.
Federal Housing Administration Commissioner David Stevens told the
Journal that "there is not any plan for expanding into a high
[loan-to-value] refinance program at this time."
On the other
hand, though I totally disagree with government bailing out
mortgage holders, I also disagree strongly with spending hundreds
of billions to benefit one in a million.
Enjoy the wealth redistribution - change you can believe
in! what is the point of trading (or doing anything for that
matter), if you can could sit back and have the government forgive
your debt?
That article infuriates me. Spend billions to please one
in five people. I dont know why they dont do more things to
motivate homeowners to stay in their home. Things like making
the homeowners insurance they pay a write-off towards their taxes.
That would be an added small benefit to home ownership that may
motivate people to stay in their home. I am sure there are
others, even though this is a small one it helps everyone not just
the ones irresponsible.
Posted by desertrat on 5th of Aug 2010 at 01:49 pm
bernake hinted about it in his testimony last week. they are
going to institute a streamline refi process for folks that are
underwater thus the reason the rates keep dropping. read this
...........
1) A
change in the reinvestment policy would be aimed at avoiding a
passive shrinkage of the Fed's balance sheet. Although the
Fed's buying program ended in March, their portfolio of
MBS has not yet started to contract because a significant
portion of the purchases were for forward settlement
-- the settlement of these transactions has just about offset
the impact of prepayments and the Fed's overall MBS holdings have
remained fairly steady (see attached chart). However, just
about all of the forward trades had settled as of the end
of July. So, the underlying shrinkage in the principal balance
related to prepayments should now start to become more apparent
absent any new action.
2) Even though
prepay speeds are slower than would be expected given the
current rate environment, Colin Teichholtz estimates that
prepayments will lead to about a 2% per month decline in the Fed's
MBS portfolio going forward from here. On a base of $1.12 trillion
of holdings, that amounts to about $20 bil per month. 3) A
near term decision on this issue is probably dependent on the
outcome of Friday's employment report. We suspect that
another weak report would lead to adoption of the reinvestment
change at next Tuesday's FOMC meeting. 4) From our
standpoint, it would make a lot of sense to combine a Fed
reinvestment program with measures aimed at streamlining the refi
process (as outlined in our "Slam Dunk Stimulus"
proposal). However, the Fed does not really have any authority
over the GSE's or the mortgage origination process -- that would be
up to the FHFA and the Treasury Dept. The motivation for a change
in the Fed's reinvestment policy seems to be merely related to
avoiding balance sheet shrinkage. 5) The MBS market is
still reeling from the disruption caused by the Fed's massive
buying -- fails are running near historic highs and liquidity is
abnormally low. Thus, we suspect that the Fed would buy Treasuries
-- rather than MBS -- if they do decide to reinvest the principal
repayments. And, they would probably concentrate their
buying in the short coupon sector since that would make
for the easiest exit strategy, thereby appeasing the hawks.
yeah the house bailout sucks for those of us who lived within
our means
For me personally, financially it's probably dumb, but my house
is almost paid off, I've been paying 7 - 8 extra payments every
month for a while, so it's almost paid off. Yeah I can make
more return % wise in the market than I lose but for me it's peace
of mind, I want no debt whatsoever. For my wife and I, our
cars are paid off, we have no credit card payments, the last thing
is the house and it's almost gone
but what's where's my incentive? do the wrong thing and
get bailed out, do the write right and get nothing.
oh well, being debt free, having money in the bank is
good.
Posted by airstream on 5th of Aug 2010 at 02:36 pm
My wife and I last year decided to sell our expensive house in
the Bay area and move to Idaho and we paid cash for a beautiful
home that gives us a huge feeling of security. For me it is like
buying an annuity as rent on a comparable house up here would
be $2500 a month and I could not get that return on
400K to 500K in a safe investment if there is such a thing
anymore. You have to live somewhere so for me I love not
haveing to write a check each month to send to some bank. If
things get really rough in this economy we will have a place to
live. We are also debt free. I spent most of my life being a
debt slave but leverage does not work for you anymore
.
Matt, we live in strange times. I grew up hearing about Mortgage
burning parties of my parents friends, had one myself about 10
years ago. When have you heard of anyone doing that? My
sister-n-law and her husband refinance their house ever 2 years and
probably owe more now than when they started. I'm like you, my
house,cars and all I have is paid for and I love it! What is weird
is that we now make more money on our credit cards than we do on
our savings accounts by using Citi and Discover cards we get 1-5%
cash back on all our purchases. We charge everything but always pay
the balance in full at the end of the month. Our savings accounts
are only paying 1.5% ! just one more scary part of
today's financial system. A banker recently told me he didn't want
my money, he can borrow it cheaper from Washington than he can pay
me for it!!!!
Sure wish I had a printing press, I'd show them cheap money.
wow thanks for the examples and yes we live in strange times for
sure
it's one reason why the markets hold up, because where else do
you put your money into besides gold, you can't get an return on
your money in banks, savers are punished, so it flows into riskier
assets looking for a return.
Yes we do the same thing with our credit cards too, however I
also have some banks in my area that pay 4.6% up to 25K, they call
it an extreme checking account, you have to make 12 transactions
per month and one one bill electronically per month, so my wife and
I both have 2 of these accounts a piece, we put things on there
like gas, little items at Wallgreens, stuff we would normally buy
anyway so in the end you make about $95 on each $25K each month,
yeah not a lot, but pays for most of the little things we buy
anyway, here's a link to one of the banks:, see The Club
Checking
Thanks Matt, and yes we have one of those $25K checking accounts
too, my bank calls it TBC The best checking. you have to have their
debt card and use it 10 times per month. you have to have one
direct deposit and one withdrawal and it's paying about
4.5% it started at 5% about two years ago. Also, if you use
Discover, go to their website and the click on "shop discover" and
if you can find the merchant in their data base you can get extra
savings on things like $45 will get you a $50 Carraba's card. Like
I said, we are making more on our credit cards than on our
savings!
Posted by desertrat on 5th of Aug 2010 at 02:00 pm
its better to sleep at night have some cash and if it hits the
fan you can have opportunity to do something. we sold our big house
got a smaller one and sleep like babies haha!!
The lesson is obvious: In this country at this time, it
pays to borrow as much as possible and spend well
beyond your ability to repay because you will be bailed
out and all it will cost you is your vote......
.......and to those of you who lived within your
means....well....you're all suckers!
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An August Surprise from Obama?
Posted by dylan398 on 5th of Aug 2010 at 12:35 pm
article
"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"
Rumor quelled
Posted by pthoreson on 5th of Aug 2010 at 03:29 pm
Stay calm.....
WASHINGTON (MarketWatch) - Government officials on Thursday rejected speculation that they had any plans to conduct a massive mortgage refinancing program to stimulate the economy, according to the Wall Street Journal. Federal Housing Administration Commissioner David Stevens told the Journal that "there is not any plan for expanding into a high [loan-to-value] refinance program at this time."
On the other hand, though I totally disagree with government bailing out mortgage holders, I also disagree strongly with spending hundreds of billions to benefit one in a million.
Enjoy the wealth redistribution -
Posted by bigpun on 5th of Aug 2010 at 02:31 pm
Enjoy the wealth redistribution - change you can believe in! what is the point of trading (or doing anything for that matter), if you can could sit back and have the government forgive your debt?
That article infuriates me. Spend
Posted by cwa82675 on 5th of Aug 2010 at 01:17 pm
That article infuriates me. Spend billions to please one in five people. I dont know why they dont do more things to motivate homeowners to stay in their home. Things like making the homeowners insurance they pay a write-off towards their taxes. That would be an added small benefit to home ownership that may motivate people to stay in their home. I am sure there are others, even though this is a small one it helps everyone not just the ones irresponsible.
its coming!! if jobs number is bad tomorrow FOMC will react tuesday!
Posted by desertrat on 5th of Aug 2010 at 01:49 pm
bernake hinted about it in his testimony last week. they are going to institute a streamline refi process for folks that are underwater thus the reason the rates keep dropping. read this ...........
Fed – David Greenlaw comments on the WSJ story today, “ Fed Mulls Symbolic Shift ”:
1) A change in the reinvestment policy would be aimed at avoiding a passive shrinkage of the Fed's balance sheet. Although the Fed's buying program ended in March, their portfolio of MBS has not yet started to contract because a significant portion of the purchases were for forward settlement -- the settlement of these transactions has just about offset the impact of prepayments and the Fed's overall MBS holdings have remained fairly steady (see attached chart). However, just about all of the forward trades had settled as of the end of July. So, the underlying shrinkage in the principal balance related to prepayments should now start to become more apparent absent any new action. 2) Even though prepay speeds are slower than would be expected given the current rate environment, Colin Teichholtz estimates that prepayments will lead to about a 2% per month decline in the Fed's MBS portfolio going forward from here. On a base of $1.12 trillion of holdings, that amounts to about $20 bil per month. 3) A near term decision on this issue is probably dependent on the outcome of Friday's employment report. We suspect that another weak report would lead to adoption of the reinvestment change at next Tuesday's FOMC meeting. 4) From our standpoint, it would make a lot of sense to combine a Fed reinvestment program with measures aimed at streamlining the refi process (as outlined in our "Slam Dunk Stimulus" proposal). However, the Fed does not really have any authority over the GSE's or the mortgage origination process -- that would be up to the FHFA and the Treasury Dept. The motivation for a change in the Fed's reinvestment policy seems to be merely related to avoiding balance sheet shrinkage. 5) The MBS market is still reeling from the disruption caused by the Fed's massive buying -- fails are running near historic highs and liquidity is abnormally low. Thus, we suspect that the Fed would buy Treasuries -- rather than MBS -- if they do decide to reinvest the principal repayments. And, they would probably concentrate their buying in the short coupon sector since that would make for the easiest exit strategy, thereby appeasing the hawks.
yup..so all of us morons
Posted by dylan398 on 5th of Aug 2010 at 01:34 pm
yup..so all of us morons who bought a house within our means with 20% down and work sometimes 2 jobs...can just suck it..
yeah the house bailout sucks
Posted by matt on 5th of Aug 2010 at 01:54 pm
yeah the house bailout sucks for those of us who lived within our means
For me personally, financially it's probably dumb, but my house is almost paid off, I've been paying 7 - 8 extra payments every month for a while, so it's almost paid off. Yeah I can make more return % wise in the market than I lose but for me it's peace of mind, I want no debt whatsoever. For my wife and I, our cars are paid off, we have no credit card payments, the last thing is the house and it's almost gone
but what's where's my incentive? do the wrong thing and get bailed out, do the write right and get nothing.
oh well, being debt free, having money in the bank is good.
A paid for house
Posted by airstream on 5th of Aug 2010 at 02:36 pm
My wife and I last year decided to sell our expensive house in the Bay area and move to Idaho and we paid cash for a beautiful home that gives us a huge feeling of security. For me it is like buying an annuity as rent on a comparable house up here would be $2500 a month and I could not get that return on 400K to 500K in a safe investment if there is such a thing anymore. You have to live somewhere so for me I love not haveing to write a check each month to send to some bank. If things get really rough in this economy we will have a place to live. We are also debt free. I spent most of my life being a debt slave but leverage does not work for you anymore .
Matt, we live in strange
Posted by ditch on 5th of Aug 2010 at 02:12 pm
Matt, we live in strange times. I grew up hearing about Mortgage burning parties of my parents friends, had one myself about 10 years ago. When have you heard of anyone doing that? My sister-n-law and her husband refinance their house ever 2 years and probably owe more now than when they started. I'm like you, my house,cars and all I have is paid for and I love it! What is weird is that we now make more money on our credit cards than we do on our savings accounts by using Citi and Discover cards we get 1-5% cash back on all our purchases. We charge everything but always pay the balance in full at the end of the month. Our savings accounts are only paying 1.5% ! just one more scary part of today's financial system. A banker recently told me he didn't want my money, he can borrow it cheaper from Washington than he can pay me for it!!!!
Sure wish I had a printing press, I'd show them cheap money.
wow thanks for the examples
Posted by matt on 5th of Aug 2010 at 02:32 pm
wow thanks for the examples and yes we live in strange times for sure
it's one reason why the markets hold up, because where else do you put your money into besides gold, you can't get an return on your money in banks, savers are punished, so it flows into riskier assets looking for a return.
Yes we do the same thing with our credit cards too, however I also have some banks in my area that pay 4.6% up to 25K, they call it an extreme checking account, you have to make 12 transactions per month and one one bill electronically per month, so my wife and I both have 2 of these accounts a piece, we put things on there like gas, little items at Wallgreens, stuff we would normally buy anyway so in the end you make about $95 on each $25K each month, yeah not a lot, but pays for most of the little things we buy anyway, here's a link to one of the banks:, see The Club Checking
http://www.4thebank.com/rates.asp
in the past they used to pay 5.5%
Thanks Matt, and yes we
Posted by ditch on 5th of Aug 2010 at 03:48 pm
Thanks Matt, and yes we have one of those $25K checking accounts too, my bank calls it TBC The best checking. you have to have their debt card and use it 10 times per month. you have to have one direct deposit and one withdrawal and it's paying about 4.5% it started at 5% about two years ago. Also, if you use Discover, go to their website and the click on "shop discover" and if you can find the merchant in their data base you can get extra savings on things like $45 will get you a $50 Carraba's card. Like I said, we are making more on our credit cards than on our savings!
i agree totally.........
Posted by desertrat on 5th of Aug 2010 at 02:00 pm
its better to sleep at night have some cash and if it hits the fan you can have opportunity to do something. we sold our big house got a smaller one and sleep like babies haha!!
The lesson is obvious: In
Posted by steever on 5th of Aug 2010 at 01:43 pm
The lesson is obvious: In this country at this time, it pays to borrow as much as possible and spend well beyond your ability to repay because you will be bailed out and all it will cost you is your vote......
.......and to those of you who lived within your means....well....you're all suckers!