Fannie warns homeowners who walk away

[patientrenter]

FNMA and Freddie don’t have nearly enough capital to cover their losses from the kind of downturn we all talk about here on Piggington. As the prior poster pointed out, it’s easy to get around the new rules, so everyone will. FNMA and Freddie aren’t dumb, so they know that.

I think there are folks at those organizations who think the market will start going back up again in 2009 or so, before they’re wiped out. These folks think the new rules won’t have to bite because all will be well once the market starts to go back up again. All will be forgiven. In the meanwhile, they get credit for appearing to be tough now.

Other folks at Fannie and Freddie see what we see, and know that the organization will be bailed out, but maybe not the stockholders. In their eyes, there’s no benefit in coming up with rules that actually bite, and actually save money, because the govt will end up having to cover all actual losses in excess of shareholder equity. So they just announce stuff to make themsleves sound prudent enough to deserve the bailout when it comes.

For heaven’s sake, these organizations are still lending 80% or more of home prices that are still multiples of the inflation-adjusted prices at the low point (1996) of the last cycle. They obviously aren’t trying to match their risk management practices to the risks we see.

Patient renter in OC

[patientrenter]

FNMA and Freddie don’t have nearly enough capital to cover their losses from the kind of downturn we all talk about here on Piggington. As the prior poster pointed out, it’s easy to get around the new rules, so everyone will. FNMA and Freddie aren’t dumb, so they know that.

I think there are folks at those organizations who think the market will start going back up again in 2009 or so, before they’re wiped out. These folks think the new rules won’t have to bite because all will be well once the market starts to go back up again. All will be forgiven. In the meanwhile, they get credit for appearing to be tough now.

Other folks at Fannie and Freddie see what we see, and know that the organization will be bailed out, but maybe not the stockholders. In their eyes, there’s no benefit in coming up with rules that actually bite, and actually save money, because the govt will end up having to cover all actual losses in excess of shareholder equity. So they just announce stuff to make themsleves sound prudent enough to deserve the bailout when it comes.

For heaven’s sake, these organizations are still lending 80% or more of home prices that are still multiples of the inflation-adjusted prices at the low point (1996) of the last cycle. They obviously aren’t trying to match their risk management practices to the risks we see.

Patient renter in OC

[HLS]

It’s an empty threat. Nationwide, it’s now NON-recourse debt for anybody who walks that bought OR refinanced their principal residence without taking cash out….

The Mortgage Forgiveness Debt Relief Act of 2007 applies to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Giving them 5 years to recover is a favor.

The punishment would be insisting that they HAVE TO buy again within 12 months !!

5 years is a decent amount of time to repair their credit, save up for a down payment, and then end up buying the house next door for 50% less than they owe on theirs today.

The sooner they come to their senses and walk away, the sooner the 5 year clock starts ticking. Many people should be encouraged by this offer, and not be surprised if it is changed from 5 years to 2 or 3 years in 2010-2011…

The “system” may desperately need those people to soak up some excess inventory around that time.

[HLS]

It’s an empty threat. Nationwide, it’s now NON-recourse debt for anybody who walks that bought OR refinanced their principal residence without taking cash out….

The Mortgage Forgiveness Debt Relief Act of 2007 applies to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Giving them 5 years to recover is a favor.

The punishment would be insisting that they HAVE TO buy again within 12 months !!

5 years is a decent amount of time to repair their credit, save up for a down payment, and then end up buying the house next door for 50% less than they owe on theirs today.

The sooner they come to their senses and walk away, the sooner the 5 year clock starts ticking. Many people should be encouraged by this offer, and not be surprised if it is changed from 5 years to 2 or 3 years in 2010-2011…

The “system” may desperately need those people to soak up some excess inventory around that time.

[HLS]

It’s an empty threat. Nationwide, it’s now NON-recourse debt for anybody who walks that bought OR refinanced their principal residence without taking cash out….

The Mortgage Forgiveness Debt Relief Act of 2007 applies to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Giving them 5 years to recover is a favor.

The punishment would be insisting that they HAVE TO buy again within 12 months !!

5 years is a decent amount of time to repair their credit, save up for a down payment, and then end up buying the house next door for 50% less than they owe on theirs today.

The sooner they come to their senses and walk away, the sooner the 5 year clock starts ticking. Many people should be encouraged by this offer, and not be surprised if it is changed from 5 years to 2 or 3 years in 2010-2011…

The “system” may desperately need those people to soak up some excess inventory around that time.

[HLS]

It’s an empty threat. Nationwide, it’s now NON-recourse debt for anybody who walks that bought OR refinanced their principal residence without taking cash out….

The Mortgage Forgiveness Debt Relief Act of 2007 applies to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Giving them 5 years to recover is a favor.

The punishment would be insisting that they HAVE TO buy again within 12 months !!

5 years is a decent amount of time to repair their credit, save up for a down payment, and then end up buying the house next door for 50% less than they owe on theirs today.

The sooner they come to their senses and walk away, the sooner the 5 year clock starts ticking. Many people should be encouraged by this offer, and not be surprised if it is changed from 5 years to 2 or 3 years in 2010-2011…

The “system” may desperately need those people to soak up some excess inventory around that time.

[HLS]

It’s an empty threat. Nationwide, it’s now NON-recourse debt for anybody who walks that bought OR refinanced their principal residence without taking cash out….

The Mortgage Forgiveness Debt Relief Act of 2007 applies to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Giving them 5 years to recover is a favor.

The punishment would be insisting that they HAVE TO buy again within 12 months !!

5 years is a decent amount of time to repair their credit, save up for a down payment, and then end up buying the house next door for 50% less than they owe on theirs today.

The sooner they come to their senses and walk away, the sooner the 5 year clock starts ticking. Many people should be encouraged by this offer, and not be surprised if it is changed from 5 years to 2 or 3 years in 2010-2011…

The “system” may desperately need those people to soak up some excess inventory around that time.

[DWCAP]

So feign alittle stress and you will be fine. I am sure there will be a dozen loopholes and exceptions that any morgage broker worth ANYTHING could drive a mack truck through. All government programs never really exclude anyone, cept maybe the very wealthy, and they dont really care about morgages anyways.
This is political posturing. Fannie and Freddie cant get the new limits extended without paying lipservice to risk managment and speculation punishment. Just wait, in October when it becomes obvious that this recession really did hurt, that inflation is killing everyone but the top 20% and that housing will be falling for years to come the calls to extend the “temparary rates” will be played up as prudent financial planning in the media by some bleeding heart group and the particular government agency that they whore themselves to just before election time. “But think of the Children!” will be their ralling cry, as that never fails to make a few eyes get misty.
The morgage brokers and banks are already alittle disapointed by the outcome of the refi BOOM that was suppose to happen. Rates just havnt fallen enough yet. Maybe it is a month or two away, but I suspect the full doc portion is killing alot of people that need to refi and rates just are not worth it for those who don’t. This “almost contained subprime liquidity crisis” (snort, ya keep calling it that) just wont be over in time to meet the deadline at the end of this year. I kinda think this will end up like the Alternative Minimum Tax, limits adjusted yearly by congress to make it look like Washington cares.
Look, eventually the FED is gonna have to do something about inflation and that means raising rates. Everyone is all mesmorized by the threading of the needle the government is claiming they will do by lowering inflation by a slowing economy while simlutaniously boosting the economy with rebate checks to end any recession that might have constrained inflation. The day it becomes obvious that is hogwash rates will have to go up and if the artifical rate buydown isnt in place we will be right back where we started with even more debt and a bunch of waisted time.

So feign your stress, walk if it suites you, and feel comfortable in the knowledge that big brother has your back even if he has to act alittle tough in public.

[DWCAP]

So feign alittle stress and you will be fine. I am sure there will be a dozen loopholes and exceptions that any morgage broker worth ANYTHING could drive a mack truck through. All government programs never really exclude anyone, cept maybe the very wealthy, and they dont really care about morgages anyways.
This is political posturing. Fannie and Freddie cant get the new limits extended without paying lipservice to risk managment and speculation punishment. Just wait, in October when it becomes obvious that this recession really did hurt, that inflation is killing everyone but the top 20% and that housing will be falling for years to come the calls to extend the “temparary rates” will be played up as prudent financial planning in the media by some bleeding heart group and the particular government agency that they whore themselves to just before election time. “But think of the Children!” will be their ralling cry, as that never fails to make a few eyes get misty.
The morgage brokers and banks are already alittle disapointed by the outcome of the refi BOOM that was suppose to happen. Rates just havnt fallen enough yet. Maybe it is a month or two away, but I suspect the full doc portion is killing alot of people that need to refi and rates just are not worth it for those who don’t. This “almost contained subprime liquidity crisis” (snort, ya keep calling it that) just wont be over in time to meet the deadline at the end of this year. I kinda think this will end up like the Alternative Minimum Tax, limits adjusted yearly by congress to make it look like Washington cares.
Look, eventually the FED is gonna have to do something about inflation and that means raising rates. Everyone is all mesmorized by the threading of the needle the government is claiming they will do by lowering inflation by a slowing economy while simlutaniously boosting the economy with rebate checks to end any recession that might have constrained inflation. The day it becomes obvious that is hogwash rates will have to go up and if the artifical rate buydown isnt in place we will be right back where we started with even more debt and a bunch of waisted time.

So feign your stress, walk if it suites you, and feel comfortable in the knowledge that big brother has your back even if he has to act alittle tough in public.

[DWCAP]

So feign alittle stress and you will be fine. I am sure there will be a dozen loopholes and exceptions that any morgage broker worth ANYTHING could drive a mack truck through. All government programs never really exclude anyone, cept maybe the very wealthy, and they dont really care about morgages anyways.
This is political posturing. Fannie and Freddie cant get the new limits extended without paying lipservice to risk managment and speculation punishment. Just wait, in October when it becomes obvious that this recession really did hurt, that inflation is killing everyone but the top 20% and that housing will be falling for years to come the calls to extend the “temparary rates” will be played up as prudent financial planning in the media by some bleeding heart group and the particular government agency that they whore themselves to just before election time. “But think of the Children!” will be their ralling cry, as that never fails to make a few eyes get misty.
The morgage brokers and banks are already alittle disapointed by the outcome of the refi BOOM that was suppose to happen. Rates just havnt fallen enough yet. Maybe it is a month or two away, but I suspect the full doc portion is killing alot of people that need to refi and rates just are not worth it for those who don’t. This “almost contained subprime liquidity crisis” (snort, ya keep calling it that) just wont be over in time to meet the deadline at the end of this year. I kinda think this will end up like the Alternative Minimum Tax, limits adjusted yearly by congress to make it look like Washington cares.
Look, eventually the FED is gonna have to do something about inflation and that means raising rates. Everyone is all mesmorized by the threading of the needle the government is claiming they will do by lowering inflation by a slowing economy while simlutaniously boosting the economy with rebate checks to end any recession that might have constrained inflation. The day it becomes obvious that is hogwash rates will have to go up and if the artifical rate buydown isnt in place we will be right back where we started with even more debt and a bunch of waisted time.

So feign your stress, walk if it suites you, and feel comfortable in the knowledge that big brother has your back even if he has to act alittle tough in public.

[DWCAP]

So feign alittle stress and you will be fine. I am sure there will be a dozen loopholes and exceptions that any morgage broker worth ANYTHING could drive a mack truck through. All government programs never really exclude anyone, cept maybe the very wealthy, and they dont really care about morgages anyways.
This is political posturing. Fannie and Freddie cant get the new limits extended without paying lipservice to risk managment and speculation punishment. Just wait, in October when it becomes obvious that this recession really did hurt, that inflation is killing everyone but the top 20% and that housing will be falling for years to come the calls to extend the “temparary rates” will be played up as prudent financial planning in the media by some bleeding heart group and the particular government agency that they whore themselves to just before election time. “But think of the Children!” will be their ralling cry, as that never fails to make a few eyes get misty.
The morgage brokers and banks are already alittle disapointed by the outcome of the refi BOOM that was suppose to happen. Rates just havnt fallen enough yet. Maybe it is a month or two away, but I suspect the full doc portion is killing alot of people that need to refi and rates just are not worth it for those who don’t. This “almost contained subprime liquidity crisis” (snort, ya keep calling it that) just wont be over in time to meet the deadline at the end of this year. I kinda think this will end up like the Alternative Minimum Tax, limits adjusted yearly by congress to make it look like Washington cares.
Look, eventually the FED is gonna have to do something about inflation and that means raising rates. Everyone is all mesmorized by the threading of the needle the government is claiming they will do by lowering inflation by a slowing economy while simlutaniously boosting the economy with rebate checks to end any recession that might have constrained inflation. The day it becomes obvious that is hogwash rates will have to go up and if the artifical rate buydown isnt in place we will be right back where we started with even more debt and a bunch of waisted time.

So feign your stress, walk if it suites you, and feel comfortable in the knowledge that big brother has your back even if he has to act alittle tough in public.

[DWCAP]

So feign alittle stress and you will be fine. I am sure there will be a dozen loopholes and exceptions that any morgage broker worth ANYTHING could drive a mack truck through. All government programs never really exclude anyone, cept maybe the very wealthy, and they dont really care about morgages anyways.
This is political posturing. Fannie and Freddie cant get the new limits extended without paying lipservice to risk managment and speculation punishment. Just wait, in October when it becomes obvious that this recession really did hurt, that inflation is killing everyone but the top 20% and that housing will be falling for years to come the calls to extend the “temparary rates” will be played up as prudent financial planning in the media by some bleeding heart group and the particular government agency that they whore themselves to just before election time. “But think of the Children!” will be their ralling cry, as that never fails to make a few eyes get misty.
The morgage brokers and banks are already alittle disapointed by the outcome of the refi BOOM that was suppose to happen. Rates just havnt fallen enough yet. Maybe it is a month or two away, but I suspect the full doc portion is killing alot of people that need to refi and rates just are not worth it for those who don’t. This “almost contained subprime liquidity crisis” (snort, ya keep calling it that) just wont be over in time to meet the deadline at the end of this year. I kinda think this will end up like the Alternative Minimum Tax, limits adjusted yearly by congress to make it look like Washington cares.
Look, eventually the FED is gonna have to do something about inflation and that means raising rates. Everyone is all mesmorized by the threading of the needle the government is claiming they will do by lowering inflation by a slowing economy while simlutaniously boosting the economy with rebate checks to end any recession that might have constrained inflation. The day it becomes obvious that is hogwash rates will have to go up and if the artifical rate buydown isnt in place we will be right back where we started with even more debt and a bunch of waisted time.

So feign your stress, walk if it suites you, and feel comfortable in the knowledge that big brother has your back even if he has to act alittle tough in public.

[jpinpb]

DWCAP – Great post! Thanks.

[jpinpb]

DWCAP – Great post! Thanks.

[jpinpb]

DWCAP – Great post! Thanks.

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