Open Thread: Reinflating the Real Estate Bubble
By NB Staff | August 31, 2011 | 10:50
It seems proponents of demand-side economics have learned nothing from the recent bursting of the real estate bubble as it is now rumored that the Obama White House is looking to push a massive refinancing scheme powered by the unregulated and unreformed Fannie and Freddie in yet another effort to use government cash to increase private spending:
The refinancing initiative would allow certain borrowers to refinance loans that are backed by government-owned Fannie Mae and Freddie Mac or the Federal Housing Administration, the sources said.
A broad-based effort to automatically refinance millions of mortgages is not in the works, yet the administration is looking to take targeted changes to an existing program that would allow more borrowers to take advantage of low mortgage rates, including allowing borrowers to refinance even if they owe a significant amount above their property's current value.
The idea is to help struggling borrowers refinance at current low interest rates, which would cut their monthly payments and free up cash for other spending. The hope is that this could drum up overall business activity.
If people were to participate in the refinancing, it would seem that this would have more of a lasting impact than the utterly wasteful first-time homebuyer credit of 2009. Still, where is the money going to come from and how soon would a refinancing change cause liberals to whine about too-strict lending standards like they have already started doing? Tell us your thoughts in the comments.
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Comments
What Dave looks like in front of his computer these days
Submitted by Dave. on Wed, 08/31/2011 - 10:55am.
Just in case you were wondering.
-Dave
The Fannie Mae and Freddie Mac
Submitted by Comrade Jim on Wed, 08/31/2011 - 11:08am.
Officials (Raines, Gorelick, ...) should have gone to jail and Fannie and Freddie should have been sold off. Their political protectors (Frank, Dodd, Shela Jackson Lee,...) should have been thrown out of Congress. The lesson of Fannie and Freddie is that the government should not be in the housing business or house financing business. It was the perfect cesspool of political corruption.
A lot of correcting yet to do - let it occur
Submitted by Gary Hall on Wed, 08/31/2011 - 11:14am.
Shiller - A History of Home Values
(;~/ gary
hey!
Submitted by kata on Wed, 08/31/2011 - 11:20am.
what's a little redistribution of property among friends.
Didn't they already try this?
Submitted by bluefeetbrews on Wed, 08/31/2011 - 11:23am.
On their own balance sheet and it flopped?
I could see it if Fannie and Freddie already owned and serviced the mortgages already. But it sounds like any mortgage housed with any lender that's g'teed would qualify. So they're asking lenders to sacrifice future interest income for some peace of mind that the distressed borrowers would be better able to meet their obligations.
So I wonder if Fannis and Freddie are going to hand out cash equal to the NPV of the lost revenue. If so, who'd set the discount rate? What could the cash be used for? If the borrower defaults anyway and you call the guaranty, would the cash received today offset the future amount of the gty? Too nebulous right now...
So, the Banks get another infusion of $
Submitted by IgnatzJFahrquar on Wed, 08/31/2011 - 11:43am.
and the Societal Leeches (aka - Obama's voting base) get another break from their irresponsible "Givs Me Dat" attitude ... all at our (the ones who pay Fed taxes and pay our mortgages on time) expense.
Little wonder Obama got elected
Submitted by Dave. on Wed, 08/31/2011 - 11:55am.
I realize this is a small sample, but it still bodes ill for our country.
-Dave
Unfriggin believable. No you
Submitted by Scuba Dude on Wed, 08/31/2011 - 12:15pm.
Unfriggin believable.
No you dolts, the primary role of a business is to MAKE MONEY!!!!
You ignorant, socialist pieces of fecal matter have ruined this country and our economy.
Exploiting suicide on The Real Housewives
Submitted by vaboxrboy on Wed, 08/31/2011 - 11:58am.
Fox just aired the entire 911 call of Taylor and the friend as they discovered the body of the deceased. Please get on the air the next time you do your media mash-up and tell them how horrible they are. So far Bravo has only released a statement after the fact. There was NO reason to play that tape in its entirety and I'm sure it will run on Fox News 5 more times before the day is done.
Must do this now! Now now now now!
Submitted by jon_torlin on Wed, 08/31/2011 - 12:30pm.
Well, looks like the manchild is thumping his.....chest.......about taxes and of course wants to raise the gas tax. And like before, is calling for it to be done with great urgency and is throwing out phony numbers.
gas tax
How petulant. I believe him just as much as I believe he used the buses without taking them on jets and etc. What a waste of money that was. He's really good at that.
-Jon
So let's get this straight...
Submitted by drsamherman on Wed, 08/31/2011 - 1:34pm.
...Obama wants to reinflate the real estate bubble so consumers will tap the equity in their homes again despite the fact that he said this contributed to the economic mess we are in due to the financial meltdown from subprime loans?
The Democrats are not a circular firing squad. They are a circular chainsaw-wielding mob of paranoid schizophrenics. WOW.