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Obama to announce action on mortgages

Posted by WARREN MOSLER on October 24th, 2011

About time!

Obama to announce action on mortgages

By Kate Mackenzie

October 24 (Financial Times) — US regulators on Monday plan to unveil a major overhaul of an under-used mortgage-refinance program designed to help millions of Americans whose home values have tumbled, the WSJ says. The plan will streamline the refinance process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments. The measures will not require congressional approval, says Reuters, and the first of the initiatives will be unveiled during Obama’s three-day trip to western states beginning Monday. He will discuss the changes in mortgage rules at a stop in Nevada, which has one of the hardest-hit housing markets in the country. The Obama administration has been working with the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, to find ways to make it easier for borrowers to switch to cheaper loans even if they have little to no equity in their homes.

11 Responses to “Obama to announce action on mortgages”

  1. Adam2 Says:

    Electioneering by Obama? Cynic says yes.

    But it is still the right thing to do and as you say Warren, 3 years late but about time.

    Reply

  2. Joe C Says:

    “…as long as homeowners are current on their mortgage payments.”

    A day late and a dollar short. As usual.

    Reply

    Clonal Antibody Reply:

    @Joe C,

    In other words bring out the defibrillator after the patient is already dead!

    Reply

    ESM Reply:

    @Clonal Antibody,

    This should have been done two years ago, but it only amounts to about $4B/yr transfer from agency mortgage investors (including the Fed) to homeowners.

    It’s like rubbing your feet on a carpet and touching Gaddafi’s chest with your finger.

    Reply

    Gary Reply:

    @ESM,

    “it only amounts to about $4B/yr transfer from agency mortgage investors (including the Fed) to homeowners.”

    How?

    ESM Reply:

    @ESM,

    It will allow about 1MM additional homeowners with mortgages averaging 5.5% to refinance to 4%. If the average loan balance is $270K, then that comes to a savings of about $4B/yr in interest.

    Clonal Antibody Reply:

    @ESM,

    Yes Yves Smith on this

    I was plenty skeptical.

    The program revealed on Monday is true to form: greatly underpowered and more likely to benefit banks than homeowners.

    WARREN MOSLER Reply:

    that too…

    Reply

  3. CybrWeez Says:

    Isn’t there some merit to the idea that this sort of help props up the housing market, helping such bubbles as we just experienced? I see the benefit in getting people more spending money (in principle anyway), but when govt subsidizes housing, then it will inflate (like college education).

    Reply

    WARREN MOSLER Reply:

    if the ‘subsidy’ is a mortgage based on income, it serves to make housing prices a function of income

    Reply

  4. Joe C Says:

    @WARREN MOSLER, Right – and nothing on principle. If you’re underwater, we’re going to lift you until your eyes are just above the water level!

    Your housing rescue is much better, Warren.

    I don’t watch many terror/horror movies because I don’t like the feeling that comes with knowing that the zombie/freak/monster is only mostly dead and can pop out at any minute while the protagonist is doing something really stupid. I’m starting to feel this way when I check the news.

    Reply

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