How about a national Mortgage Bank....

[Bigmack]

Banksters and brokesters are reluctant to lend money. What do you think about a Mortgage Bank run by the Federal Government?

The private sector has proven that it can't be trusted to run the housing sector without fucking it up, so the government needs to step in.

You borrow from the government not at market rate, but at whatever rate pays for all the bureaucracy plus 1% "profit" for the government agency.

Jobs would be created... after all, houses would have to be inspected and paperwork attended to. (If you've ever been thru escrow, you know the paperwork is awesome.)

No NINJA loans, no shady loans, no balloon payments, no speculation on homes....

Sounds OK to me but I'm starting to think I might be one of those godless socialists.

[RKP5637]

1. Sure makes sense to me. One can't look at the private sector and say they've

never F'ed up.

[NoNothing]

3. You can't say the same of FNMA and FHLMC either

For what it's worth.

[OneTenthofOnePercent]

4. On the flip side...

One can't look at the .gov sector and say they've never F'ed up either.

[RKP5637]

20. We're just all F'ed up... lol n/t

[NoNothing]

2. Making borrowing cheaper

Does not stop speculation, and it doesn't prevent swings in housing value either. It just makes it so that people can get more house for the same monthly payment. As it is, rates are already extremely low.

[Bigmack]

7. I'm saying an agency that could...

stop speculation. Something simple like a lid on the number of houses you could own - or own in a 5 year period - under the agency plan. If you can get private lending...knock yourself out. A mortagor can always indicate how much it is willing to lend on a particular house. The Federal agency would essentially be able to put a lid on price spikes.

Note: I am NOT in the housing or banking field, but I feel that if those people can invent the shit they have invented over the past 10 years, my proposed Federal Agency could maybe find a few reasonably honest ones to write the rules for the benefit of the many rather than the few.

[NoNothing]

9. In that case, what effect would this have

Other than to prop up housing prices? The people who took part in the speculating, by definition, *did* qualify for private lending, so they wouldn't be affected by this program at all. Sure, people will use your agency if it is cheaper, but as soon as you try to impose restrictions, they can just jump back into the same private market. Right? I mean, if people think the house they buy will greatly increase in value, and your agency won't loan them the money, they'll just borrow it from someone else, won't they?

[Bigmack]

15. My point is...

that the government should be able to loan at significantly lower interest, so the flippers and bullshit artists would have to rent their money in the private sector, and it will be well known that government isn't picking up any of the tab if the price drops.

As I say, I'm not in the field, but it seems to me that if the Federal agency set a price they were willing to lend on for a house, that would de facto be the price of the house..... might slow down speculation.

[NoNothing]

18. How, exactly

Is the government supposed to loan at significantly less than 4%? Bubbles aren't caused by people NOT being able to afford homes! Assuming that the federal interest rate was a little lower than the market rate, how exactly does that set a de facto price for the house? The market value of the house is the *most* that somebody is willing and able to pay for it, not the *least.* To have any effect at all, your agency would have to somehow make it more difficult for people who *can* borrow the money privately to do so, not make it easier for people who *can't.*

[Bigmack]

19. You got it!...

your agency would have to somehow make it more difficult for people who *can* borrow the money privately to do so,..

Yup... and more powers than that too.

I'm not as afraid of the government as I am of the banksters/brokesters.

[slackmaster]

5. 27 years in Financial Services here - I think that's a great idea

K&R

:kick:

[eridani]

22. Any way you could organize people with similar views and similar experience?

You'd for sure have a lot of street cred, like the doctors at PNHP.

[slackmaster]

24. I want Congress to do its job

Otherwise, they need to be fired wholesale.

[galileoreloaded]

6. Uhhhhhh, the national mortgage bank is the only one lending...FNM, FRE?

I mean, you realize they are the only game in town right?

As a sidebar, they now hold just as much subprime debt as was held privately before the first leg down. Its just that now the debt is backed by the same expanding Fed balance sheet that guarantees your Social Security bond is not devalued via fiat debasement.

Were havin' fun now!

[Bigmack]

12. Both of them are corporations...

... with like... stock, and that stuff, aren't they. Fanny Mae is actually a private company, no?

I'm talking about a straight-out Federal agency... no middlemen of any kind.

[galileoreloaded]

17. Read: Implicit government guarantee.............just because the lines are blurry,.......

only means the lines are blurry.

[taught_me_patience]

8. I'm totally against this idea

The government should not be in the business of determining where capital should flow in the economy.

[AnArmyVeteran]

10. Yeah, the private sector does such a wonderful job doing it.

[Bigmack]

13. They already are:

Graduated income tax... military spending...banking and credit regs that fuck the little guy... like that.

[exboyfil]

11. I thought we had two of them

Fannie Mae and Freddie Mac, and they are part of the reason we are in the situation we are in today.

Interest rates are not the reason for lack of mortgage loans. Approval is the issue. If you want to loosen standards again, then will we be sitting on more unservicable mortgages. Right now 30 year fixed are trading at less than 4%. I actually would hate to be the institution holding that paper. I assume that they have diversified with LT federal obligations, but still, 4%??

A big reason for all those exotic loan instruments was that far too many people were buying more house than they could afford and/or their credit history did not give confidence on their ability to pay the mortgage back.

[Bigmack]

14. Not from what I read....

According to Aaron Pressman, writing in Bloomberg BusinessWeek in 2008, Fannie and Freddie were victims, not perpetrators, of the housing crisis.

Pressman writes that “virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie ... most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.”

It’s time to lay blame for the housing crisis, and by extension the recession, where it belongs. The packaging and selling of mortgage-backed securities allowed private mortgage lenders to make loans they knew were going to be uncollectable. However, someone else would be left holding the worthless mortgage.

[customerserviceguy]

16. You beat me to it

The housing bubble was a game of "don't be the last sucker in". By buying up all the mortgages, Fannie Mae and Freddie Mac are the last suckers. We haven't even begun to digest what they've 'eaten' yet, but we're going to wind up with a national case of acid reflux.

[eallen]

21. Like FNMA? I don't want the government encouraging debt. People buying as much house....

People buying the biggest house whose mortgage payment they could maybe manage for a while was a large part of what got us into the current mess. Fannie Mae and Freddie Mac were part of the problem.

A house is not an investment. It is not automatically a wise financial choice. Most people should budget a house purchase cautiously.

Debt is not your friend.

:hippie:

[unblock]

23. at the moment, that's exactly what we have

there is effectively zero private investment in mortgages. the banks are biding their time while their existing overexposure is ever so slowly whittled down. in the meanwhile, the fed is essentially THE source of funds for new mortgages.

the banks will eventually return to funding mortgages themselves, but only once their capital ratios are in line with the new, far more conservative standards than the acceptable ratios that got us into this mess in the first place.


all the government's moves can be seen as a plan to support the banks and the market for their problem loans while they recognize their losses at a slow, comfortable pace instead of forcing them to recognize those losses quickly.