It is the latest iteration of the President’s attempt to nationalize the residential mortgage industry and spend the taxpayers money.
From this report:
The U.S. government is considering expanding its mortgage refinancing program to include borrowers whose mortgages are not backed by Fannie Mae and Freddie Mac, the Wall Street Journal reported, citing people familiar with the discussions.The refinancing program now being considered also seeks to include "underwater" borrowers who owe more than their homes are worth, the Journal said.The proposal would also transfer potentially riskier loans held by private investors to the government-sponsored mortgage entities Fannie Mae and Freddie Mac, the paper said.Such a move would require congressional authorization to temporarily change the charters of Fannie Mae and Freddie Mac, according to the Journal.About 22 percent of all homes with a mortgage, or around 10.8 million homes, down from 12.1 million last year, were worth less than the outstanding balance at the end of June, the Journal said, citing data from CoreLogic.
It appears to me that the Administration’s continued lack of action on residential mortgage lending and delay in reform of Fannie and Freddie is intentional and strategic attempt to preserve the GSE’s dominance in the mortgage market.
Given the endless delays by Senate and Administration in adopting the reform measures passed by the Republican controlled House, which by the way conform to the expressed intent to “privatize” the residential capital markets proposed under the Treasury Departments 2011 White Paper on GSE reform, the only logical explanation seems to be that in reality the Administration opposes privatization.
I suspect the longer they can preserve the present residential industry dependence upon Fannie, Freddie and the FHA (still well over 85% of all mortgages originated), the greater the likelihood that these dependent special interest groups will insist on preserving them. The National Association of Realtors has already lobbied for the preservation of the GSE’s. The Mortgage Bankers Association is re-reviewing their earlier recommendation to move toward greater privatization.
"Pete the Banker" is a long time Portland area banker. He is a member of the Victoria Taft Blogforce.