The mortgage program only covers mortgages already backed by Fannie and Freddie

[Phoebe Loosinhouse]

at least this is my understanding so far. Which makes sense, since the government guarantor is in a position to have leverage with the banks that wrote these loans, which by the way, only account for 20% of the bad mortgages, much as the Repubs would like to blame Fannie and Freddie for the WHOLE debacle.

However, that still leaves 80% of the privately securitized mortgages at risk. So, it's nice, it may help some people, but in no way will it "resolve" the mortgage crisis.

[Dawgs]

1. I think the point is to encourage others to do the same as Fannie/Freddie.

[Phoebe Loosinhouse]

2. Although they were already "encouraging" this with the Hope for Homeowners

program which has produced almost nothing in terms of results so far. Again, that was a "voluntary" program for the banks. They don't seem to be volunteering.

[kirby]

3. Where did you get your 20% number?

"Fannie/Freddie account for 20% of the bad mortages". Where did you get that number from? Are you talking sub-prime mortgages only? While that number might be accurate for sub-prime, I question it for the regular market.

Also, Fannie/Freddie were nationalized, so the US Govt can force this. It is probably a much thornier issue forcing private markets. (I'm not saying it shouldnt be done, I'm just highlighting why Fannie/Freddie were targeted initially)

[Phoebe Loosinhouse]

4. It's a figure I've seen more than once, but here is a link

http://www.mcclatchydc.com/251/story/53802.html
Posted on Sunday, October 12, 2008
Private sector loans, not Fannie or Freddie, triggered crisis
By David Goldstein and Kevin G. Hall | McClatchy Newspapers
skip

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

The whole rightwing talking point that Fannie and Freddie "pushed" the industry into making bad loans is just totally untrue, but it works as a nice bogeyman for the uninformed.

[kirby]

5. Ok, that 20% is subprime only...

I'd love to know the percentance of ALL loans Freddie/Fannie control, not just subprime. Subprime was just the tip of the iceberg.
I agree about the talking point. The most repeated is that the Community Reinvestment Act forced loans to poor folks.

[Phoebe Loosinhouse]

6. here you go - a source that answers your question

http://seattlepi.nwsource.com/local/387416_mortgage12.html

Last updated November 11, 2008 11:17 p.m. PT

Help for Freddie, Fannie loans on the way
Plan covers thousands of homeowners
By AUBREY COHEN
P-I REPORTER

skip

Fannie Mae and Freddie Mac own or guarantee almost 31 million mortgages, about 58 percent of all single-family loans, Lockhart said. Those mortgages only represent 20 percent of serious delinquencies.

[kirby]

7. Thanks...

More than 50% is what I recalled, but your source confirms it. Thank you. The next big mess is the option-ARM and Alt-A mortagage. I dont think Fannie/Freddie had anything to do with those and they dwarf the subprime mess.

[Mike 03]

8. That wasn't my understanding. I thought he only said that Fannie and Freddie

would be in charge of refinancing the mortgages. I didn't hear him provide any limitations whatsoever on who originated the mortgages.

[Phoebe Loosinhouse]

9. From the NYT

http://economix.blogs.nytimes.com/2009/02/18/obamas-housing-plan-who-will-benefit/?hp
February 18, 2009, 1:57 pm
Obama’s Housing Plan: Who Will Benefit?
By David Leonhardt
Updated at 4:20 p.m.

The new plan will help some of them refinance their mortgage at a lower rate. But only loans backed by Fannie Mae and Freddie Mac — not many of the subprime loans at the heart of the foreclosure problem — will be eligible. And the loan cannot exceed 105 percent of the current value of the property. Since prices have fallen almost 50 percent in some areas, like Phoenix, Las Vegas and parts of Florida, the cap will exclude many homeowners.

In fact, the number of homeowners that the White House estimates will be helped by the refinancing part of the plan — between four and five million — includes many who are not now underwater. Their mortgages are worth between 80 percent and 100 percent of their house value, which means they are above water but cannot refinance. (On many refinancings, banks require the equivalent of a 20 percent down payment, in the form of house value.)

So this plan will help only a small fraction — perhaps one in 10, or even less — of underwater homeowners. And it will provide only a modest subsidy to those it does help.

Of course, it's possible that this guy could be wrong, but you would think not, it IS the NYT after all.

[Phoebe Loosinhouse]

10. Morning kick. Good morning!