From NY Fed President William Dudley: The National and Regional Economic OutlookThis suggests a "comprehensive" plan is in the works. The new refinance plan will be announced today, see from Nick Timiraos at the WSJ: Home Lending Revamp PlannedStabilizing the housing sector is particularly important because housing equity is an important part of household wealth. This calls for a comprehensive approach to housing policy, starting with an urgent effort to remove the obstacles that make it difficult for all borrowers to refinance at today's low mortgage rates, but extending beyond this to tackle other problems weighing on housing. Taken together, such efforts could help shift people's expectations about future house prices, If prospective homeowners no longer fear that prices could decline further, they will be more willing to enter the market to take advantage of reduced prices and low financing costs, and existing homeowners will feel more confident about spending. A vicious cycle could be replaced by a virtuous circle, in which stabilization in house prices supports spending, growth and jobs.
The plan will streamline the refinance process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments ... Fannie and Freddie have also agreed to waive some fees that made refinancing less attractive for some.
Monday, October 24, 2011
Obama's New Plan: Screwing Banks by Forcing Them to Re-Finance Housing They have No Obligation to Re-Finance
The President is about to force banks into re-financing many more houses than they contracted to do. But, it should buy Obama more votes. Calculated Risk explains:
Subscribe to:
Post Comments (Atom)
So like the end of free checking, the fees for taking out a new mortgage with a new bank will go through roof.
ReplyDeleteIt's interesting that something that prudence dictates is a liability is considered an important asset by Dudley.
ReplyDeleteHave these geniuses that support this kind of crap ever stopped and wondered that maybe what screws the markets up and makes investors leery to buy is market manipulation? They seem incapable of comprehending that manipulation, even done with the best of intentions, produces no different results then manipulation done with the worst of intentions. When markets are manipulated it becomes impossible for buyers and sellers to know what the real market price is and thus makes speculators out of both.
ReplyDelete"Stabilizing the housing sector is particularly important because housing equity is an important part of household wealth."
ReplyDeleteI'm becoming more and more convinced that efforts to maintain nominal housing prices -- and therefore tax assessment values -- is a frantic effort to prop up municipal bond ratings which enable (vote buying) federal matching funds to be funneled to all kinds of local boondoggles.
I don't think that these people understand that for most of us, houses are still too expensive!
ReplyDeleteThey also seem to imagine the 'evenly rotating economy' orbits around building houses.
Higher House price/equity causes higher property tax that steals household wealth. It is a wealth transfer from the productive to the parasites.
ReplyDeleteThat's almost as bad as the Administration's Government Loan Guarantee to a care company that is making the cars in Finland.
ReplyDeleteSince when does higher real estate values equal more local property tax revenue? I was taught in civics class that a town set a budget, apportioned the cost among all the taxable real estate in the town and came up with a tax rate. If the budget was the same next year and all the real estate in the town doubled in value the tax rate would half. The town would not get to collect twice its budget.
ReplyDeleteMunch, if that was the way it worked then where would they get money to build million dollar water parks, plant $900 trees in the median, pay for a new gym and spa in the courthouse for employees, and pave roads with gold?
ReplyDeleteThe reality is far, far different than the ideal, and these towns used the rising home values to raise their budgets. Now that prices are going down, they can't pay for the bonds they issued to fund these "public" boondoggles. The interest payments are eating 20-50% of the "new" budget, so raising property taxes is the only way to pay for it.
Addendum to Munch-
ReplyDeleteGoogle "municipal bankruptcy" and set an alert- dozens of small communities are filing for protection, Harrisburg PA just filed, and it looks like the deal to avoid BK in Jefferson County, Alabama (the largest potential "sovereign" BK in the nation) has fallen through. These municipal debts are going to get bigger and faster as debts grow and tax revenue falls, in spite of the temporary boom the FED has engineered.
RDF,
ReplyDeleteGlad you suggested setting a google alert for this issue.....I believe it's going to get interesting.