Mortgage Bailout: Answers Raise Troubling Questions

Update 2: A website for people who pay their mortgage?

Update: Clarification - if I read this correctly, the banks will be made whole on now over-priced loans, homeowners who in some cases should have never bought these homes will get a complete pass - and the tax payers will get the short end of two sticks, taking losses both should have taken in any legitimate market-based transaction.

Obama's Mortgage Bailout plan may face lawsuits and reading some of the known details raises some troubling questions. By law Fannie and Freddie require a 20% down payment or mortgage insurance. For now the plan seems to want to pretend that law doesn't exist by skirting it - making these re-fi's without requiring appraisals. Without that safeguard tax payers could end up paying far more than a home is worth to some homeowners many believe deserve eviction in the first place - particularly as home prices have dropped dramatically. Are you having fun, yet?

President Barack Obama’s plan to use mortgage-finance companies Fannie Mae and Freddie Mac to refinance as many as 5 million loans may face legal challenges over whether the administration is overstepping its authority.

Fannie and Freddie’s federal charters are brief “and the language is clear” that any loan purchase must have either 20 percent equity or mortgage insurance, said Jim Vogel, an agency- bond analyst for FTN Financial in Memphis, Tennessee.

No Appraisals Required

The Obama plan would temporarily allow Fannie and Freddie to refinance loans that they own or guarantee with loan-to-value ratios of as much as 105 percent without appraising the property or requiring additional mortgage insurance.

Comments

[Fred Beloit]

Anyone: The mortgage balloon has burst.
Obama: We must put it back together so we can blow it up again.
Anyone: You can blow a burst balloon up again? Why?
Obama: Of course we can and we must. You must sacrifice to make it happen with your tax dollars and those of your progeny onward through the generations. When I rise to speak about it tonight, it will all make, you know, perfect sense. Just reading my words, uh, won't do. You have got to be there for the delivery.

[templar knight]

It's all about the reparations, Fred. And we must bankrupt whitey, so he will never have the upper hand again. Destroying the economy in the process is karma, baby!

[Lala]

I can't believe he's taking over prime time again. I'm so happy I have satellite and DVR.

[Fred Beloit]

HOPE there will be a decent movie on tonight so I can CHANGE channels for it.

[seekeronos]

"--- HOPE there will be a decent movie on tonight so I can CHANGE channels for it. ---"

Hope is not required, when there is Netflix.

[Eric Blair]

I think the shtick here is make the lenders keep the mortgages instead of selling them off. If that had been the deal in the first place, the hot potato game with the subprimes would never have happened because the lenders wouldn't have lent. They would have Dodd, Frank and the rest thrown out of Congress.