Wall Street Whispers: Mortgage Market's Necessary Evil

[tridim]

WASHINGTON (TheStreet) -- The government's enormous estimates of how much more cash taxpayers will have to dole out to keep Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) alive indicate that the two firms have become a necessary evil on the long road to a housing recovery.

The government estimated on Thursday that the two mortgage-finance giants may require $142 billion to $363 billion over the next few years. The outcome is heavily dependent upon two unpredictable factors: Home prices and interest rates.

In an ironic twist, the cost to taxpayers will be $80 billion to $100 billion lower if Fannie and Freddie aren't required to pay dividends on the funds to the U.S. Treasury Department. The two firms have to borrow more money from the in order to pay those fees... from the Treasury.

Since the government took over Fannie and Freddie in September 2008, the loss projections have only climbed. Last December, the Treasury lifted the cap on their $400 billion credit line to offer unlimited support. So far, they've drained $148 billion from the taxpayer till.

More: http://www.thestreet.com/_yahoo/story/10895896/1/wall-street-whispers-mortgage-markets-necessary-evil.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

It's breaking wide open. JPM and BoA are currently trending down sharply.

[Amonester]

1. How many decent houses would $400 billion provide to the homeless?

But no, it's got to go to the already obscenely wealthier-than-98%-of-the-rest-of-the-people, can't-have-free-riders bankstering CEOs.

[JuniperLea]

3. Socialist!

Hsssss!


Yeah, of course you are correct. They are taking the last few pennies we the people have.

[JuniperLea]

2. I always wondered what was in it for the banks in all this mess they created...

I think the end result will look much like the cash wealth distribution, with 2% of the population owning 90% of the real property in the USA.

[dixiegrrrrl]

4. As some of us predicted.......

Geithner and his wrecking crew bought the ( now worthless ) mortgage bonds from the banks,
stuffed them in Fannie and Freddie, who they "rescued " once already,and now, since "we" own
that debt, "we get to pay it, while the banks are busy fighting off other charges of fraud.
factually, the few hundred billion in Fannie and etc is but a teeny part of the entire money pit,
since it has now been revealed that the banks used the same mortgages for several bond trusts.
( which is why we will never be able to see the actual mortgage note of the loans)

[county worker]

5. The underlying value to this debt is the homes people live in.

I think a much better solution is for the government to take over the loans, renegotiate the terms with the home owner and let people remain in their houses with payments they can afford. If they can't make the payments, turn the loan into a lease option. The homeowner becomes a renter and part of the rent payments goes toward a down payment in a future purchase transaction at a certain time.

When the government takes over the loans it also has the rights to the colateral thus there is an asset not debt. Overtime the interest on the loans pay the cost of administration. In a recovery period the government could sell the loans to a reputable bank provided there are good regulations.

We need to start looking at this from the prospective of what is good for the middle class and not what is good for wall street. This economy will only grow if there is a vibrant middle class. We cannot continue to print money to prop up banks!

[tridim]

6. "President Obama's New Federal Bank Forecloses On Millions Of Homeowners"

That'll be the headline we will see if that happens.

I don't want the government "owning" homes. It's a recipe for disaster.

[county worker]

7. LIke Medicare and Medicaid and VA hospitals are a disaster?

What happens is the government contracts with a private company to manage the program. It cuts the costs since there is no real profit motive other than the company doing the administration of the program.

Medicare is managed in part by a company called Palmetto. The reason it is different from other insurance is that it can dictate reimbursement rates.

By the government taking over the troubled housing market it puts it into the hands of people who want to do what's best for all as much as possible rather than keeping it in the hands of corporations who have their stock value as the motivation for everything they do.

[tridim]

8. Doesn't matter how it is structured, we'll still see that headline.

[county worker]

9. I find it so frustrating that people on this board stick to a line of bull shit

no matter how much evidence is presented to the contrary.

[tridim]

10. Uhm, Faux News?

Do you still not understand why that channel exists?