Promote your business or product on 700level.com. For
more information about advertising with us CLICK HERE!

Posted in the bleeds by accident, but thought this might generate some discussion.

I basically want everyone to lose their houses, so this is in stark contrast to my anti-housing view.
link

Socialize the risk, privatize the profits.

I wonder if the muckety mucks at Fanny & Freddie are taking pay cuts.

Here are some of the details...there are strings attached, but the owner gettign bailed out essentially gets to re-purchase the house at its current assessed value while the responsible people making their payments still get to pay full price from the boom years.

Who's eligible?
Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.

How can I apply?
Borrowers can contact their current mortgage servicer or go directly to an FHA-approved lender for help. These lenders can be found on the Web site of the Department of Housing and Urban Development.

How does the refinancing process work?
This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home's current value. In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender.

But lenders won't sign off on a workout unless they think that they'll lose less money on that than they would by allowing a home to go through the costly foreclosure process.

Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home's current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.

Based on that new appraised home value, the FHA lender must determine how much the original lender has to reduce the original mortgage, so that it will reflect 90% of the home's market value.

If the original lender agrees to the writedown, the new lender buys the old loan and takes over the reworked mortgage.

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.

What does it cost?
There should be little up-front costs for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.

However, the refinanced loans do come with many strings. For one thing, borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers also agree to share any profits from future home-price appreciation with the FHA. To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.

Plus, they'll agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

After a year, borrowers will share 90% of the profits with the FHA. The percentage keeps dropping in 10% increments to 50% after the fifth year, where it stays.

Sounds perfectly fair to me, a responsible person who bought his house in 2006.

Just think...if you stop making your payments, you can get it at 2008 prices.

What a fool I was to buy within my limits and plan for future cost of living increases.

Is there going to be any meaningful reform regarding the two (Freddie and Fannie)?

Not really...they get to back larger loans now and all the regulation/restriction was aimed at the borrower.

It's a fucking joke.
--------------------------
A stronger regulator for the GSEs. The new regulator will have a greater say over how well funded the two government sponsored enterprises (GSEs) are - a major concern in the markets that has sent stocks in both companies plunging in the past two months.

A permanent increase in "conforming loan" limits. The law will permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,500 from $417,000.

The FHA maximum loan limits for high-cost areas would also increase to a maximum of $625,500. Higher loan limits will make it easier for borrowers to get mortgages, because those mortgages are more likely to be traded if they are considered conforming.

A new home-buyer credit. The new law includes a tax refund for first-time home buyers worth up to 10% of a home's purchase price but no more than $7,500.

The refund, however, serves more as an interest-free loan, since it would have to be paid back over 15 years in equal installments.

A ban on down-payment assistance from sellers. The new law eliminates a program that has allowed sellers to provide down payment assistance for FHA loans.

The law would also increase to 3.5% from 3% the down payment requirement for borrowers getting FHA loans.

A new affordable housing trust fund. The law establishes a permanent fund to promote affordable housing. The fund will be paid for by fees from Fannie and Freddie.

Grants to states to buy foreclosed properties. The law grants $4 billion to states to buy up and rehabilitate foreclosed properties. The White House has opposed such funding, contending that it will benefit lenders and not homeowners.

Bolster Fannie and Freddie
A late and controversial addition to the new housing law provides temporary authority for the Treasury to lend a financial hand to Fannie Mae and Freddie Mac if the Treasury deems it necessary to help stabilize markets.

Concerns over whether Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) will have enough money to weather future losses in the housing market has sent shares plummeting in recent weeks. Since the beginning of June, Fannie's stock price has dropped 55% and Freddie's plummeted 64%. For the past year, they're both down over 80%.

Fannie and Freddie guarantee the purchase and trade of mortgages and own or back $5.2 trillion in mortgages.

The law includes provisions that let Treasury offer Fannie and Freddie an unlimited line of credit and buy stock in the companies. The provisions expire in 18 months.

Both critics and supporters of the Paulson plan have expressed concern that loaning or investing money in the companies could leave taxpayers with a fat bill to pay.

Treasury Secretary Paulson has said that merely having the powers in place may boost confidence in the two companies enough to preclude the need for Treasury to step in.

The Congressional Budget Office last week estimated the potential cost of a rescue could be $25 billion. CBO said there is probably a better than 50% chance that Treasury would not need to step in. It also said there is a 5% chance that Freddie's and Fannie's losses could cost the government $100 billion.

Richard F. Syron, chairman of Freddie Mac, earned $14.5 million in 2007, including a $2.2 million performance bonus.

Daniel H. Mudd, Fannie Mae president and chief executive, saw his pay drop 15 percent last year, according to the company's proxy. Still, Mudd received $14.2 million in 2007, including a $10 million direct stock award.

Good job guys!
Yo, click it

Those two fucks should be shot.

The first $20some million for the bailout should be coming directly out of their fucking pockets.

Socialize the risk, privatize the profits.

beautifully stated. wonder if the GGB's, BMAs and IMS's of the world will be crying about "free handouts" and "irresponsibility" regarding the two FMs.

in all seriousness, is this is a good time to buy freddie mac/fannie mae stock?

What would I be complaining about, exactly?

What would I be complaining about, exactly?

how irresponsiblity, short-sightedness and greed should not be rewarded, whether we are talking about drug-running "urbans" or white-collar buffoons.

Good thing B Hussein O dropped former Fannie Mae executive Jim Johnson from his vice-presidential team. He got bonuses in the mult-millions when the problems were coming to light years ago.

They'd hang his name on Obama like a suit.
click here

I still can't believe poor people who took loans to buy homes they couldn't afford are losing their houses.

What a world, what a world.....

Flesh, I posted months ago that I thought that the people that put so much thought into electing a President clearly could not have put much thought into signing a mortgage.



That said, your analogy is murky, at best.

I still can't believe poor people who took loans to buy homes they couldn't afford are losing their houses.

and i can't believe lender's who took advantage of the situation by offering loans to "subprime" candidates now find their stock prices plummeting and need a federal bailout just to stay afloat.

what a world, indeed.

f4f,
How did the lenders take advantage of those people?

How did the lenders take advantage of those people?

the same way a loan shark takes advantage of people. the blame goes both ways, but it was the lender's that made the loans available in the first place. they knew they were high risk, that's why they were called "subprime" loans in the first place, for f's sake.

Flesh, what I said went for both parties

So, they charged those people much higher interest rates than the typical lender? How much higher did they charge the borrowers?

And before IMS or GGB jump in about the world of business, I do understand that a business taking a risk is entitled to adjust their prices to account for the risk.

Still, if the lenders are charging 3-5% higher than a typical borrower (FHA, VA), that should be worth discussing.

How much higher?

Calm Down, NCSF. I'm not jumping in about anything. For Fuck's sake.



I THINK a big part of this mess was that they signed ARM mortgages which went up as interest rates rose some, all the while their house value was plummeting.

ARMs can be bad, but they can also be good. It really depends on the market. I wouldn't consider an ARM loan "taking advantage" of a lender. The name itself says, "Adjustable."

My brother was in an ARM for a while. I opted out of the idea because I didn't want to buy a bigger house and rely on low mortgage rates or refinancing in a few years.

the same way a loan shark takes advantage of people. the blame goes both ways, but it was the lender's that made the loans available in the first place. they knew they were high risk, that's why they were called "subprime" loans in the first place, for f's sake.

Lenders fucked up, but didn't "shark" these people.

The people took on debt they couldn't afford. The lender should have turned them down for a mortgage and the people should have known they can't operate at a "budget deficit" in their personal finances.

The lender is getting bailed out and the retards who can't do math are getting bailed out.

Where's my reward?

ARMs can be bad, but they can also be good. It really depends on the market. I wouldn't consider an ARM loan "taking advantage" of a lender. The name itself says, "Adjustable."

My brother was in an ARM for a while. I opted out of the idea because I didn't want to buy a bigger house and rely on low mortgage rates or refinancing in a few years.

It's never a wise to bet all-time low interest rates might go lower in 3-5 years.

It might have been a smart gamble in the early 80's, but if you can't afford a particular home at 6%, you can't afford the home period (forfuckssake).

Where's my reward?

You get to pay for it!

1  2 3 4 5 6 7 8