An August Surprise from Obama?
James Pethokoukis
Political Risk
Main Street may be about to get its own gigantic bailout. 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.
The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points:
1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.
2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:
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$23 Trillion… not $700 Billion – Where’s the Change?
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2 Tim… they are running around frantically trying to put the kibosh on this rumor… but have to agree with you on how will it help people like yourself. If they are going to give people underwater on the loan to value obligation then they best prepare to skim $100,000.00 plus off a “performing loan” with equity in the property! If they don’t then thoses that have a FM loan of this nature will sue so fast heads will spin! There many many Americans out there in trouble due to JOB LOSS, and JOB LOSS only!
good luck to you!
what if a bank like suiss credit is forclosing? this fannie deal lowering principal wont help me would it? this only helps the ones lucky enough to have a fannie loan right? mind you I have no clue who suiss credit bank is, i never signed any mortage with them, but my servicer Americas Servicing Company says that is who my lender is, well atleast that was the most recent answer, i asked 8months ago and they tried to tell me americas servicing company was my lender, then a couple months later, i asked again and they said wells fargo owns it, now last week they say suisse credit owns it. ????????????????????????????????????? no help for me right with the fannie deal?
i was told no on the modification becasue my credit not good enough? the funny part is I have better credit today then the day I was given the original loan and my credit toook a hit becasue Im 60 days past due which they used against my score. my score today is 680 and it was 620 when i took out the loan, my score was around 725 before i missed a mortgage payment and havent missed any other credit related payments. so looks like im a fast track to being homeless.