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Obama's Solution to Fannie and Freddie....Obama Home!
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thombiz



Joined: 25 Jun 2007
Posts: 554
Location: Corpus Christi

PostPosted: Fri Nov 22, 2013 4:47 pm    Post subject: Obama's Solution to Fannie and Freddie....Obama Home! Reply with quote

Obama wants to replace Fannie Mae and Freddie Mac with a new and improved housing financial system. Let's call it.......wait for it.........wait for it......Obama-Home, "If you like your home, you will be able to keep your home!"
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joew



Joined: 18 Jul 1999
Posts: 152

PostPosted: Tue Nov 26, 2013 8:41 pm    Post subject: Reply with quote

Hey Thom your avatar makes you look like some old disgruntled white guy.
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thombiz



Joined: 25 Jun 2007
Posts: 554
Location: Corpus Christi

PostPosted: Wed Nov 27, 2013 12:05 am    Post subject: Reply with quote

Guilty on all accounts. Fortunate for me, I own my home!
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stevenbard



Joined: 11 Nov 1993
Posts: 4112

PostPosted: Wed Nov 27, 2013 7:17 pm    Post subject: Reply with quote

Keep up the good news Thom! Pretty soon they'll be calling you a racist..
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mac



Joined: 07 Mar 1999
Posts: 5202

PostPosted: Wed Nov 27, 2013 10:00 pm    Post subject: Reply with quote

Naw, more like tin hat stuff.
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stevenbard



Joined: 11 Nov 1993
Posts: 4112

PostPosted: Thu Nov 28, 2013 2:52 am    Post subject: Reply with quote

mac wrote:
Naw, more like tin hat stuff.


Ah yes, any man who's worked hard for his money and home should have a portion confiscated. One of the 48% who is working should support those who don't....

I'm all for caring for my fellow man, but the divisive nature of our current president is pathetic. I guess I'll just put my tin hat on too.
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youwindsurf



Joined: 18 Aug 2012
Posts: 584
Location: North Shore High School

PostPosted: Thu Nov 28, 2013 6:09 am    Post subject: Reply with quote

stevenbard wrote:
I'm all for caring for my fellow man, but the divisive nature of our current president is pathetic.


I must admit that the point of the OP is lost on me. The post appears to be a derisive comment on the President's statements regarding the ACA set within the context of phasing out Fannie and Freddie. I don't understand what one has to do with the other. However, as a result of the derisive nature of the post, I must assume that the OP is a Conservative. I thought that the Conservatives wanted to privatize Fannie and Freddie. Apparently, so does the President.

What I find more pathetic and divisive is the fabrication of stories and attributing them to our current president. Question for thombiz: What objection do you have to the phasing out of Fannie and Freddie and privatizing the same? Do you really know the substance of the issue, or did you just randomly put these two unrelated issues together (phasing out Fannie and Freddie and the ACA) so you could publish the derisive name "Obama Home" as a means to express your hatred of the President?

Read on thombiz:

http://articles.latimes.com/2013/jun/26/business/la-fi-fannie-freddie-20130626

WASHINGTON — Nearly five years ago, the subprime meltdown triggered a huge taxpayer bailout of housing finance giants Fannie Mae and Freddie Mac.

Now a bipartisan group of senators has launched the most comprehensive effort yet to clean up the mess and dramatically reduce the government's role in the mortgage market.

Four Democrats and four Republicans want to shut down Fannie and Freddie over five years and replace them with a new government agency modeled on the Federal Deposit Insurance Corp. — one that would be funded by industry fees and play a much smaller role in guaranteeing mortgage debt.

The new Federal Mortgage Insurance Corp. would grow gradually as the government unwinds Fannie and Freddie. Since the 2008 financial crisis, the two financing giants, along with the Federal Housing Administration, have backed about 90% of all new home mortgages.

The plan unveiled Tuesday would reduce the risk to taxpayers if the housing market collapses again by forcing private companies — mainly banks — that package mortgages into securities to hold at least 10 cents in capital for every dollar of the underlying loans to cover the first wave of potential losses.

Had such a provision been in place in 2008, the bill's backers said, there would have been enough money to back Fannie and Freddie losses without the need for the government to pump $187 billion, to date, into the companies to cover mortgage guarantees.

"It lessens the footprint of the federal government in housing. It winds down Fannie and Freddie, but at the same time it keeps the housing finance industry in a liquid state," said Sen. Bob Corker (R-Tenn.), who is leading the group along with Sen. Mark R. Warner (D-Va.). "We believe it is time to act."

The bill's backers admit that the legislation is likely to undergo major changes before it could pass. It faces a significant obstacle in the House, where key Republicans have said they want to get the government completely out of the housing finance industry.

But the proposal helps spur the complicated process of deciding the fate of Fannie and Freddie and the role the government should play in the mortgage market. And it earned praise from analysts and market participants for providing a solid starting point.

The Senate Banking Committee is set to consider the legislation this fall, Corker said. All eight senators who helped craft the bill serve on the 22-member committee.

"This bill is significant because it represents the first serious effort to revamp the U.S. housing finance system since the government put Fannie and Freddie into conservatorship in 2008," said Jaret Seiberg, a senior policy analyst in Washington with financial services firm Guggenheim Partners.

But the hurdles are difficult. Seiberg said there was almost no chance the bill introduced Tuesday would become law as written and noted that the odds were against any type of broad housing finance reform legislation while Obama is president.

The process of overhauling the housing finance system will take several years, Seiberg said.

The housing market recovery makes it easier for the federal government to start pulling back its support for Fannie and Freddie even if banks balk at the idea of holding 10% in reserve for loans packaged and sold as securities.

But the rebound in housing prices also has created a problem for lawmakers.

Fannie and Freddie, which are under government conservatorship, have posted record profits. And under the complex terms of their bailout, those profits come back to the Treasury in the form of dividends.

As of March, the two companies had paid $65 billion in dividends to the government. And Fannie Mae is set to make an additional $59.4-billion payment by the end of the month.

The unexpected windfall has helped reduce the federal budget deficit and push back the date by which Congress must raise the nation's debt limit, making it harder to shut down Fannie and Freddie and close that spigot, the senators admitted.

But the government has to start pulling back its support for the mortgage market because taxpayers could be forced to pump more money into Fannie and Freddie if another housing downturn hits.

"Bottom line is, the taxpayer's still on the hook and we need to fix that, and that's what this bill does," said Sen. Jon Tester (D-Mont.), another backer.

The Obama administration has been criticized for not doing more to address the future of Fannie and Freddie. Their fate wasn't included in the 2010 financial reform law.

In 2011, the administration called for Fannie and Freddie to be shut down over five to 10 years and proposed that Congress consider three options offering different levels of government support for the mortgage market.

The White House said Tuesday that President Obama welcomed the bipartisan Senate effort.

"The president strongly supports comprehensive housing finance reform that would forever end Fannie Mae and Freddie Mac's flawed business model that put the American taxpayers on the hook," White House spokeswoman Amy Brundage said.

"He would instead replace it with a new, transparent system in which the private sector plays the central role in the mortgage market and suffers the losses instead of the taxpayer, while protecting the 30-year fixed-rate mortgage and broad and affordable access to housing for responsible working families from all communities," she said.
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pueno



Joined: 03 Mar 2007
Posts: 2663

PostPosted: Thu Nov 28, 2013 7:03 am    Post subject: Reply with quote

stevenbard wrote:
I guess I'll just put my tin hat on too.

News flash, Mr. B.

You've been wearing your tinfoil hat for a long, long time. And yours has special antennae tuned specifically for Glenn and Rush.
.
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thombiz



Joined: 25 Jun 2007
Posts: 554
Location: Corpus Christi

PostPosted: Thu Nov 28, 2013 11:11 am    Post subject: Reply with quote

My OP was a straight forward statement that Obama wants to create a new housing finance solution to replace Fannie and Freddie. With the Obama track record on health care, we can expect a major screwup when he starts messing with the current housing finance system. I'm a common stock holder in both Fannie and Freddie. The Fed took them over via conservatorship in 2008, not because they were failed, but because they were hurting and the Fed needed to use them to save the US Banking system. The banks had written hundreds of thousands of bad loans, called toxic or liar loans.

If the US banking system were to survive, these bad loans would have to be absorbed by the Fed, giving the banks time to recapitalize and get back on their feet so to speak. The banks did this not by writing better loans but by raising fees on everything from check cashing to wire transfers. Back to Fannie and Freddie, the Fed, under conservatorship directed Fannie and Freddie to absorb these toxic mortgages which they did and thus the Fed pumped $187 billion into Fannie and Freddie to keep them from bankruptcy. This is referred to as "the taxpayers having to pick up the tab" where in fact it was the Fed trying to prevent the US banking system from total collapse.

The Fed and Fannie and Freddie actually did a fairly good job of handling the toxic and liar loans. They slowed foreclosures, helped a bunch of people refinance, etc., etc. and put quite a number of those toxic properties back on the market to be bought up by qualified buyers as well as real estate trusts as investments. In August of 2012 the Fed modified the terms of their conservatorship agreement such that the Fed would sweep all of the profits from Fannie and Freddie into the Fed, instead of the 10% of the profits spelled out in the original conservatorship agreement. Meanwhile, the owners of Fannie and Freddie, the shareholders get nothing. The Sweep Amendment to the conservatorship agreement prevents Fannie and Freddie from re-capitalizing. The Fed gets all the profits and none of it counts towards Fannie and Freddie paying back the $187 billion used to save the banks. In essence, the Fed expropriated Fannie and Freddie and gave the shareholders nothing for it. The Fifth Amendment to the Constitution says the Fed cannot take something for the common good without compensating the owners at fair market value.

That hasn't happened. Over the past 16 months, Fannie and Freddie have become very profitable and in December will have repaid all but $700 million of the $187 billion used to prop them up to receive the toxic loans from the banks. Plus, the Fed has gone after the banks in a token way, making them pay fines and restitution to Fannie and Freddie for the toxic loans they dumped on Fannie and Freddie. There are plenty of news articles about B of America, Wells Fargo, JP Morgan, Citigroup, Third Fifth, etc. etc. paying fines and restitution to the Fed.

And now......wait for it.............wait for it......Obama wants to close Fannie and Freddie and come up with his new and improved housing finance system that will protect the taxpayer from the scoundrels at Fannie and Freddie. Lets call it Obama Home or Obama Housing. We're the government and we've got this solved. We saw what the Fed has done to health care. Keep them the hell out of the secondary mortgage market.

It's a way for Obama to put his name on a new housing finance system for political credit, not the common good of the citizens. In every conflict, somebody has to take the blame and it is politically expedient to place that blame on Fannie and Freddie.

Fannie and Freddie are working fine. They have been working for over 70 years, honing and perfecting the packaging of mortgages into safe and viable securities. They no longer need conservatorship to save the taxpayers, or to save the banks. Just return Fannie and Freddie to the shareholders to run like the corporation it is then pass legislation requiring the banks to hold a much larger percentage of the loans they originate. If the banks have to keep more of the loans they originate, you can bet they will be higher quality. This will save the taxpayers and spread out the risk to the banks instead of concentrating it at Fannie and Freddie.


Bob Thompson
Corpus Christi
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mac



Joined: 07 Mar 1999
Posts: 5202

PostPosted: Thu Nov 28, 2013 1:37 pm    Post subject: Reply with quote

Much better post Bob T, and well informed as well. I'm all for having an adult discussion about the role of the Federal government and Federal economy in the housing market, and I think that a balanced group of information sources should be consulted. Pretty interesting article here: http://www.theguardian.com/money/2013/nov/24/save-housing-market-fannie-mae-freddie-mac

I'll extract two paragraphs to show the huge role of Freddie and Fannie in the current housing market:

Quote:
As a business model, you could a lot worse: Fannie and Freddie own or guarantee roughly nine of every 10 U.S. residential mortgages. Their dominance of the market has made them massively profitable in recent years, and they've paid back almost all of the $188 billion they borrowed from the Treasury five years ago when they came under government control in the bailouts; one payment from Fannie and Freddie actually was big enough to raise the debt ceiling for a few months. The new mortgages backed by Fannie and Freddie have record low defaults, despite a rocky economic recovery.

Here's the twist: despite the dramatic turnaround in the two firms, the current debate in Washington is not about bolstering Fannie and Freddie. It's about eliminating them. The attacks on Fannie and Freddie are, at their source, biblical in belief: perhaps a flood of legislation can wipe out the old sins of the mortgage market and make room for some newer, more moral system of financing mortgages.


Hmm, 9 out of 10 mortgages, now making money, repaid most of the money they borrowed.

As Santayana teaches, it is a good idea to study the past to avoid repeating the most egregious mistakes. Several things about the role of these entities inform the current debate, and how much it is dominated by ideology as opposed to facts. First, conservatives have wanted to eliminate Freddie and Fannie for ages, and disagree with the underlying set of values that home ownership is an American ideal, that it should not be reserved for wealthy, and that home-ownership is a source of stability for communities. The Federal government subsidizes that ideal, or dream, in a very big way. It is a fair question to ask whether or not it is worth it, it is an entirely different matter to restrict subsidizes to the haves.

Again, from the cited article, it is essential to look at who benefits, and who pays, from any so-called reform effort:

Quote:
What is often omitted from all the grand plans wending their way through the legislative alleyways, for instance, is who would benefit if Fannie and Freddie were destroyed. The answer: all their financial power in mortgages, and their government backing, would shift to the nation's big banks. The last time that happened, it led to the financial crisis and the Great Recession.

“The main actors in this debate are financed by the banks and real estate lobby,” says economist Dean Baker. “As a result, we see a solution that is very conducive to their interests.”

The options for replacing Fannie and Freddie

It's worth a tour through the options. Diversity of thought is not a strong point among them. Of the 26 different housing plans compiled by the Center for American Progress, 25 have that “kill Fannie and Freddie”structure in common; the 26th was a bill that was introduced in 2011 and never renewed.

Democrats and Republicans have argued over whether government should insure those mortgages or not, but there’s no debate over who should create the mortgage bonds. Everyone involved agrees that the mortgage market is simply too big to stay entirely under the government's control. “We think it's important for private capital to come back to the market,” said Nikitra Bailey, Senior Vice President of the Center for Responsible Lending.

Skepticism is natural. You'd be excused for thinking that Fannie Mae and Freddie Mac aren't good candidates to save the housing market. Their recent history is marked by alleged corruption, lobbying for special treatment and near-collapse. They will need at least three years to figure out a new accounting system, which has led them to the controversial choice of delaying taking losses on mortgages.


Next, we need to remember that the right blamed the 2008 recession on Freddie and Fannie rather than on the deregulation of the banking industry under Phil Gramm. One can look at the results--creation of so-called securities and suborning the integrity of the bond writing industry completely--or simply at the amount of money Gramm got from the banking industry to conclude that this was a woeful mistake. Instead, the right blamed the housing loan meltdown on Freddie and Fannie. Folks like Andrew Breitbart, James O’Keefe and Kevin Pezzi made this claim, ignoring the fact that:

Quote:
virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That’s right — most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.
http://thelonggoodbye.wordpress.com/2010/08/12/the-myth-of-fannie-mae-freddie-mac-barney-frank-the-housing-bubble-and-the-recession/

While certainly not without significant problems, Freddie and Fannie were late to the trough of greedy lenders, and a minor part of the massive bubble that developed over fraudulent sub-prime loans re-peddled as securities.

So excuse me if I don't hew to right wing talking points, which have ignored the facts throughout the meltdown. Let's have a serious talk about what should be done with Federal housing policy. But we can't ignore the various sources of subsidy, or blame it all on Obama.

By the way, your original posting was funny, and asking for facts is not ignoring the role of humor. But if you want to be serious--be serious.
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