Von Aldo

Today's Daily Outrage, Mr. President, Please Pay My Mortgage

Barry, I want a new pony!

Could President Barry (as he used to call himself) Obama be planning a-before-election surprise? Let's see, Fannie and Freedie (with Ginnie Mae) are directly responsible for the housing/credit bubble; in the first quarter of this year they bought up 95% of mortgage originations in the United States. Fannie and Freddie, now wards of the state, are still gushing red ink (with $330 billion in non-performing loans in Q1), and yet there are rumors that the Obama Administration, instead of closing these two loosey-goosey mortgage giants down, is going to use them to forgive some mortgage debt of homeowners who are under water. Is this buying votes or what?

James Pethokoukis, a Reuters columnist wrote: "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.

Here is another good article on why the two mortgage giants need to be dismantled.

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