Schumer has officially jumped the shark

[taught_me_patience]

more taxpayer bailouts.


GSEs should help erase some mortgage debt: Schumer

WASHINGTON (Reuters) - Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) should erase some mortgage debt for U.S. borrowers with sinking home values if it will help those homeowners avoid foreclosure, New York Senator Charles Schumer said on Wednesday.

Schumer called on the two mortgage finance companies to set an industry standard by letting troubled borrowers refinance to the true worth of homes devalued during the current housing market crisis. The companies' regulator also said such an idea has merit.

Specifically, Schumer endorsed the process of "partial chargeoff" which allows a mortgage servicer to reduce the principal amount of a loan to the home's true market value.


http://www.reuters.com/article/Regulation08/idUSN0631466420080206?sp=true


So homeowners get to enjoy all the benefits of asset appreciation and have zero risk if prices fall? Insane. Meanwhile, mortgages will become more expensive, as the market now has to price this additional risk to the security holders. This is insane. :banghead:

[Name removed]

1. Deleted message

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[aquart]

3. Would you say that about a Christian endorsing a Christian?

Nah. You be sure to keep your eagle eye on those evil Jews.

[SoFlaJet]

4. if it was just for that reason

absolutely-because that's the way it seemed to me

[TahitiNut]

2. Think of it this way ...

Let's say I hold the mortgage on YOUR house. Let's say you bought the house, with 10% down, for $500,000. Let's say you've been making payments, at an "introductory" interest rate, but now you can't make the payments at the prevailing MARKET interest rate. Let's also say that the house is now only worth $400,000.

Well, I could foreclose. It'd cost me money to foreclose. I'd then have to find a buyer - after repairing the damage and repainting becuase you have terrible color sense. It'd cost me money to do that and find a buyer and pay an agent.

Instead, I just charge off the loss and pretend that YOU'RE the new buyer ... with 0% down and no credit for the payments you've made.

Who got screwed the most?

[mediaman007]

5. I'm not good at this so help me...

Mortgagor: gets $50,000, plus some payments, gets a tax write off, plus doesn't have to spend money for foreclosure...

Mortgagee: paid $50,000, paid some payments, got to live in house


so far it looks ok for both, just not the tax collector


now


Mortgagor: gets a new deal, gets more money

Mortgagee: gets a new deal, still pays more money, and gets to live in the house


Is there more too this?

[TahitiNut]

6. Yes, there's more to it.

The mortgage underwriters have a HUGE 'inventory' of properties. Those properties were once marketable financial instruments that they could sell to almost anyone ...Chinese, Indian, Saudi Arabian ... almost anyone. But they can't seem to find someone to whom they can sell the PROPERTY ... for a lot of reasons. Oh, they could try to lower the price ... but not only don't they want to do that, they still might not be able to find a buyer.

You see, they want the paper, not the property.

But there's another wrinkle. This is just the beginning. They've got a bunch of paper that's going belly up ... and they're gonna get even more property. Again ... they want the paper.

Now ... it's even more complex than that. All those mortgages (paper!) are the basis for derivative instruments and tranches (more paper) ... part of the financial house of cards. They MUST convert property to paper. And the economy is, from their perspective, a tsunami of property that's wiping out their paper.

Does this help? It's hyper-simplified, but it should give a sense of why the financial industry is in a panic.

That's why they're "going on welfare" and asking for taxpayer-bought lifeboats.

[mediaman007]

7. To continue to simplify: there business is money, not goods (property.)

I think that you are saying that they need mobility with their assets and having their assets tied up in property restricts them. In fact, they lose money because they are not liquid enough to invest in the next big thing.

[UTUSN]

8. Chuck's MY hero!1 n/t

[newmajority]

9. Schumer jumped the shark when he told Chimpy to appoint Mukrazy as AG

He should have been kicked out of the Senate for that alone.