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Reuters is reporting the most astounding, wonderful, amazing, sounds too good to be true bit of gossip.
Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.[emphasis added]
If this is true, it is an act of sound economic policy, and act of humane pragmatism, and a piece of pure political genius all at the same time.
Go read the Reuters piece. I’m just stunned. In a good way.
[Earlier posts in this series and related links at FDL's Foreclosure Fraud Resources]
11 Comments
Amazing – hope it’s true. Thanks Cynthia!
As always, the devil will be in the details, but as a concept, this would be miraculous.
I’ve been seeing this in other places; just fyi, Calculated Risk considers it “nonsense.”
A couple of other takes for the curious.
From your link at Reuters:
That quote makes me think twice about it.
I hope Calculated Risk is wrong. Because it would be agame changer for the midterm elections, it would do a lot of good for a alot of people, it would be fair, and it would stabilize the housing market.
Sigh. We’ll find out this fall I guess.
In breaking news, the later announcement stated mortgage principal reduction need to go through a review and approval process.
The final stage of this process is the final approval of principal reduction. This will require the signatures of three living popes.
Well, this would be a 2nd major piece of good news in 2 days. I hope it is true. Thanks for keeping your eye on this one, Cynthia.
Cynthia, my sister told me about this story she saw at the LA airport today — I’m up to paragraph 4 and already I hope you’re seeing it too:
(I think the appropriate word is “Hallelujah!”?)
It’s actually sixth on the current list of search results on “foreclosure” by date:
A couple of those look worthy of your interest too
Boy, I’d love to believe this. But every time I think there’s something really good about to come out of this administration, I’m disappointed.
There’ve been some good things. But they’ve all been very small potatoes, sadly. Big stuff? Not yet.
CMike’s comment at Correntewire.com points out this is actually very likely a way to make the Banksters* whole on their likely to fail mortgages, and would make the taxpayers via monies given to Freddie and Fannie to lower the principal.
It will be used, I fear, to bamboozle Democratic voters into believing administration is changing its stripes by finally actively supporting Main Street. It will either work only for mortgages issued by F&F, which Dean Baker points out usually have higher downpayments and are likely not causing problems except for those held by the unemployed, or F&F were buying up underwater mortgages from the Banksters at face value, or near to it, and thus have those one their books…. He thinks it’s to benefit the Banksters.
Beware this administration bearing “gifts” for the little people….albeit this might help some in the short run.
*Not all bankers are Banksters.
Question re the Diamond Bar lawsuit, “filed in March in Los Angeles County Superior Court in Pomona” — can those case filings be found online?
remember that taxpayers will pay for the fannie mae and freddie mac forgiveness. Actually with the interest on borrowed money, they will pay for it twice.