08 February 2009

The perpetrator always returns...

Do you remember the start of the current fiscal 'crisis'?  Fannie and Freddie putting out loans to folks with No Jobs, No Income or Assets (NINJA loans)?  All of that is due to the 'regulations' put in by Congress during the 1990's under Clinton to get more people to own homes...

Remember where all this started?

From Bloomberg News on 04 FEB 2009 -

Feb. 4 (Bloomberg) -- Homeowners with Fannie Mae and Freddie Mac mortgages bigger than their property’s worth must wait for the companies and their regulator to assess the possible “unintended consequences” of allowing them to refinance into lower payments and related “hurdles,” Federal Housing Finance Agency Director James Lockhart said.

While FHFA and the two largest mortgage-finance companies are considering permitting so-called underwater borrowers whose loans Fannie Mae and Freddie Mac already own or guarantee to refinance, the companies haven’t yet submitted formal proposals seeking the right, Lockhart said. The change could harm mortgage-bond owners and also affect mortgage insurers, he said.

“One of the things we’ve seen a lot is unintended consequences, so I think we want to go through that to make sure there isn’t an unintended consequence here,” Lockhart said in a Feb. 2 interview.

It’s surprising the rule revision hasn’t happened already, because it would reduce the companies’ default costs and boost the U.S. economy by allowing more consumers to benefit from mortgage rates near record lows, said Ajay Rajadhyaksha, the head of fixed-income strategy in New York at Barclays Capital. Almost one in six U.S. homeowners with mortgages owe more than their homes are worth, Zillow.com said in a report yesterday.

“It’s not logical,” Rajadhyaksha said in a Feb. 2 telephone interview.

So if you actually got one of those loans on hideously overvalued property you *can't* refinance them... if you got it from FHFA.  Lovely, huh?  There you are an adult and everything... say, they were lending to just adults, right?  Just checking... getting into a contract and you wouldn't be allowed to do the 'right thing' because the lovely federal government backed the asinine loan you got.

But this only gets better.

And then on 06 FEB 2009 we get this from Bloomberg via WaPo:

Fannie Mae will loosen rules for homeowners seeking to lower their mortgage payments by refinancing.

The District company, which accounts for more than 40 percent of the $12 trillion in U.S. residential mortgage debt, is seeking to break a "logjam" in refinancing and allow more homeowners to take advantage of near-record low interest rates, according to Brian Faith, a spokesman for Fannie Mae, which like its rival, Freddie Mac, is under government control.

The increased flexibility for borrowers isn't enough to significantly harm mortgage-bond investors and mortgage insurers, analysts said.

"This is not yet the no-appraisal refi wave that many have feared," Matt Jozoff and Brian Ye, mortgage-bond analysts at J.P. Morgan Chase, wrote in note to clients yesterday.

Fannie Mae will drop some credit-score requirements, reduce income-documentation standards and waive the need for appraisals in some cases, according to a notice to lenders it distributed this week. The changes apply to loans that the company owns or guarantees.

Fannie Mae will probably use automated models to check home values listed on applications before offering to waive appraisals, analysts said.

The changes will also include allowing borrowers seeking to take out a loan that is 80 percent of the value of the home or less to qualify for refinancing with credit scores below its 580 minimum.

FICO credit scores as measured by Fair Isaac Corp. range from 300 to 850. The program also will lower income-documentation requirements to one current pay stub.

The program, DU Refi Plus, will start April 4.

Damn, I can get a pay stub pretty damned easily... even without having to go to a forgers!

So proof of one week of work, greater 'flexibility' on credit scores.... now wait a second.  These folks ALREADY GOT THAT ONCE.

If you haven't noticed the RULES that CONGRESS has put in place have NOT CHANGED.

Yes, for all of those out there worrying about various Spendulus packages and Porkriforia, the PROBLEM that caused this is STILL THERE and in spades.

You want a fast recovery?

Remove these damned rules and let the market take care of those who should never have gotten loans in the FIRST PLACE.  Those who default can then *rent* elsewhere.  And it is too bad if that is their only place they can go... really it is.  The idea of actually having to earn one's keep seems to be lost amidst the worries here: that is a basic and fundamental right and liberty that one has so you can be free of being a slave to government.

It does, indeed, suck to be an adult.

It sucks even worse to be treated as a petulant child by government all your damned life.

Things are tough all over, in case you hadn't noticed, and these miscreants who signed contracts they had no means of keeping are not to be catered to.  That would devalue the housing market a bit... yup!  Sucks to be an adult, no?

You want the market to EVER REVIVE?

Then lobby to get these damned rules out of the system.

I don't care if you have a D or R or I affiliation: this is corrosive to the entire citizenry and must end.  This isn't about being 'nice' but doing the right thing for EVERYONE.  The needs of this very few are destroying the system for the entire population and these are American Citizens who are adults.  They can survive going broke.  The Nation cannot afford for that to NOT happen.

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