Bloomberg: U.S. to Lose $400 Billion on Fannie, Freddie, Wallison Says

[Larry]

Basically, you, and this article, is attributing the bank bailout to the Obama administration, which is incorrect. That happened during Bush's last term in office, not Obama's.

Actually, as I understand it, the way that particular sound bite is being defended is

1) They claim that it doesn't matter when the money was appropriated and the bill was signed by the President, it's when the money is actually issued.

2) And they're saying that well, the fiscal year started in, I think, November, and therefore that's one of Obama's years.

----------

That said, I'll agree that even the deficit that Obama personally signed the bill for is going to be bigger than any of Bush's years. I think that the spending was necessary, and I don't think Obama had any intention of doing that spending. I think he got stuck with an un-anticipated problem.

But a lot spending, no matter how necessary, did happen. During his term.

Just not to the extent that the spin machine is claiming.

[twa]

1) You just claimed that in your opinion, most of the housing market was already at true value, and wouldn't have fallen.

2) And you can promise me that there would be buyers, after virtually every mortgage lender has gone bankrupt?

Yes the majority were only slightly overvalued with the main problem ones being in certain areas.(look it up)

Yes there would certainly be buyers for houses once the inflated value was lost and the price dropped to reasonable values.

Some Americans had good financial sense and appreciate a good buy,as well as many foreigners(certainly a better return than our T-bills;))

Value is value and there is a market for it.

Bankruptcy doesn't always kill a business but rather restructures it.

[Fergasun]

Of course there is positive feedback. I don't object to the positive feedback, but the moral finger-wagging.

I don't understand how it is a poor reflection of "character" to do the smart financial thing. The contract of a mortgage is essentially, "If I stop paying the mortgage, I lose my claim to the property". It is part of the risk of making a loan that the lender takes. Do they have no responsibility for due diligence?

Thank you for proving my point: That the fact of a lot of foreclosures (or otherwise walking away from a mortgage) can depress property values, which can lead to lots more defaults. This is called positive feedback.

(Your attempt to claim that I somehow think that companies defaulting on loans is somehow moral? Well, that was pathetic.)

(However, your point that "bankruptcy isn't so bad if you plan for it in advance. Especially if you intentionally stick somebody else with your debt, while hiding money someplace else, so that you can default on a loan while sitting on a lot of cash", while irrelevant to a discussion of what the consequences of a collapse of the lending business would have been, was an interesting revelation of character.)

[Thiebear]

currently 20% of mortgages are underwater? if inflation goes up watch it explode in foreclosures.

i'm 70k upside down with no way to merge the first and second... i'll walk away if it hits 8-9- 10%.

80% in orange county upside down? along with Many other places?

[81artmonk]

A totally manufactured point.

By the time Obama took office, the deficit was at $1.2 trillion dollars. According to your posted article, it said, " . . . given that Obama has already helped quadruple the deficit with his stimulus package, pledging to halve it by 2013 is hardly ambitious."

An untrue point: Obama's deficit is NOT over three trillion, which would be the figure if Obama had tripled the $1.2 trillion dollar debt he inherited. If the Obama administration had actually TRIPLED the deficit, that would be the figure at hand.

It isn't.

Basically, you, and this article, is attributing the bank bailout to the Obama administration, which is incorrect. That happened during Bush's last term in office, not Obama's.

Kinda funny how I get people yelling at me all the time that I am full of crap and if I could actually back up my points with facts people might take me seriously. I provide the proof and people discount it. These are made up numbers. these are numbers from the white house used in a graph.

I just have to laugh.

[Larry]

Kinda funny how I get people yelling at me all the time that I am full of crap and if I could actually back up my points with facts people might take me seriously. I provide the proof and people discount it. These are made up numbers. these are numbers from the white house used in a graph.

I just have to laugh.

You made a claim which was an utter fraud. A monumentally laughable claim.

People point it out.

You make a different claim.

You point out something which you claim supports your new, revised, claim.

People point out that your "proof" doesn't even support your new, revised, claim. They even point out specifically why it doesn't say what you claim it says.

You claim that people are picking on you.

[alexey]

Bankruptcy doesn't always kill a business but rather restructures it.

I think the problem was, that there would be a chain reaction if too many businesses went bankrupt within a short period of time.

This chain reaction would have started with the financial system. Several bankruptcies there (or even fears of bankruptcies) would trigger system-wide retrenching, which would further constrain credit and lending. That would, in turn, make it harder for consumers to buy things and for businesses to survive (reduced consumer spending, inability to borrow money to weather the storm).

These events would not result in a "survival of the fittest" scenario, at least in my limited understanding, but in a "great crash" scenario where even well positioned businesses and individuals would suffer greatly.

[CurseReversed]

The reason these losses are so large is because the servicers servicing all those fannie and freddie backed loans completely dropped the ball in dealing with homeowners to try to minimize losses.

For over two years they incompetently and irresponsibly mitigated the losses that were ocurring due to market downfall, mortage affordability, and jobloss.

They had trillions of dollars in mortgages, with issues and problems that needed to be handled appropriatedly and specifically to each homeowner, home, and mortgage. Instead they just overlooked the problems to the point where most homeowners couldnt even get them on the phone, because nobody was responsible for the money and nobody would do what it took to take care of things appropriately,that 400 billion loss is the result of their incompetence.

[IHOPSkins]

......"If I stop paying the mortgage, I lose my claim to the property". It is part of the risk of making a loan that the lender takes. Do they have no responsibility for due diligence?

Related:

Few Modifications Under U.S. Mortgage Relief Plan

Just over 31,000 homeowners have received permanent loan modifications under the Obama administration's mortgage relief plan, a big setback for the government's embattled effort to stem the foreclosure crisis.

Lenders blame the low success rate — only about 4 percent of the nearly 760,000 borrowers who have signed up — on borrowers who don't return the necessary paperwork to complete the process.....

....Under the program, eligible borrowers who are behind or at risk of default can have their mortgage interest rate reduced to as low as 2 percent for five years. They are given temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete the required paperwork, including proof of income and a financial hardship letter.

http://www.npr.org/templates/story/story.php?storyId=121300897&ft=1&f=1001

Why?

Homeowners above where unindicted co-conspirators with the "Preditory Lenders"....giving each other a wink and a nod

I do not wish the Government to continue to subsidize poor decision making....especially with my money

We continue to throw good money after bad

[Larry]

Why?

Homeowners above where unindicted co-conspirators with the "Preditory Lenders"....giving each other a wink and a nod

I do not wish the Government to continue to subsidize poor decision making....especially with my money

We continue to throw good money after bad

I'm having trouble figuring out what you're trying to say, here.

If (part of) your point is that a lot of the Bubble Buyers were people who intentionally took out loans that they knew they couldn't make the payments on, then I'll agree with you.

(Although I'll also point out the folks in this very thread arguing that people ought to stop making their mortgage payments whenever it's in their financial interest to do so. Whether Harry Homeowner gets foreclosed because he can't make the payments, or because he chose not to, it's still a foreclosure, a hit on the bank, and another force acting to push all of his neighbors loans under water, too.)

But are you trying to claim that a lot of folks can't take Obama's bailout because they don't have enough income? Or because they have too much, and don't qualify as "financial hardship".

[Destino]

Capitalism is allowing things to FAIL as well as prosper on their own merits.

It not I that apparently hates capitalism.

Propping up the overpriced housing market,maintaining foolish lending policies and enabling even more Wall Street credit swaps... along with the automotive crap are failing models.

That isn't capitalism that's Darwinism. Capitalism is a market system that depends on systems to avoid monopoly and total collapse. Natural capitalism is a figment of the imagination just like communism. Both depend on actions outside of human nature to function.

Newsflash no one propped up the housing market. It fell. Hard. In fact it's still falling. The only thing this did was slow the fall so that the impact crater didn't end economic life as we know it.

[twa]

I think the problem was, that there would be a chain reaction if too many businesses went bankrupt within a short period of time.

This chain reaction would have started with the financial system. Several bankruptcies there (or even fears of bankruptcies) would trigger system-wide retrenching, which would further constrain credit and lending. That would, in turn, make it harder for consumers to buy things and for businesses to survive (reduced consumer spending, inability to borrow money to weather the storm).

These events would not result in a "survival of the fittest" scenario, at least in my limited understanding, but in a "great crash" scenario where even well positioned businesses and individuals would suffer greatly.

Is that why the Fed guaranteed money market funds as well ?

[Baculus]

Kinda funny how I get people yelling at me all the time that I am full of crap and if I could actually back up my points with facts people might take me seriously. I provide the proof and people discount it. These are made up numbers. these are numbers from the white house used in a graph.

I just have to laugh.

You didn't provide any "points." You had a graph which showed some figures, all of which didn't tell the entire story. I have asked to demonstrate HOW Obama has "tripled" the spending deficit, and you did nothing of the thing.

Do you REALLY think the bank bailout happened during Obama's term of office, even though it took place in 2008? Do you REALLY think the Obama deficit is at three trillion? Because, as I have posted TWICE so far, the defict was at $1.2 trillion when he entered office in early 2009. Also, if you notice, I said the Obama deficit was at $1.4 to $1.8 trillion, which corresponds with your graph.

I have provided instances in which Bush has increased the deficit and the debt. You have not done the same, but now is your chance to do that. Show me how the spending deficit is at over three trillion, and how this was accomplished

In short, you are, again, being disingenuous, and you aren't even attempting to defend your position, other then to say that people are "screaming at you."

Either show us the money, or don't spread misinformation. As I said before, we cannot honestly discuss the federal budget's woes if we are going to invent "facts."

[IHOPSkins]

.....But are you trying to claim that a lot of folks can't take Obama's bailout because they don't have enough income? Or because they have too much, and don't qualify as "financial hardship".

The NPR report referenced not filling out the paperwork, including Income and Hardship

If people LOST income, they could apply for Hardship

If people had no CHANGE in income, they could qualify for the assistance now

Some of these Original Loans were Fradualant

I do not think the hardships with this program is a comprehension issue

Its an issue with to many NON-Legitimate Loans getting approved

This issue continues when the Government subsidizes BAD LOANS (Fannie/Freddie bailout)

Let those who took risks FAIL

[Fergasun]

There's been a number of Congressional hearings (in December, both the HFCS and the House Judiciary held hearings; the TARP COP has been discussing this for awhile.) The conclusions have been; Structurally high unemployment is becoming a major factor in home foreclosures, not the credit crises. California, Arizona, Nevada and Florida and other places where there has been a high percentage hit where the LTV is over 125% are challenged at making a mortgage modification. Many mortgages now (as opposed to 10 years ago) were not safely underwritten, fixed-rate mortgages; but adjustable rate mortgages and the lack of underwriting has hurt problems. Additionally, there's no way to make a principle write-down, unless there are incentives to the financial institutions.

It is the bank's positions that the "documents aren't sufficient". Well the reason this is true is because of their poor underwriting! Of course the documents aren't sufficient, they are now trying to (through HAMP) fully underwrite a loan that hadn't been previously fully underwritten.

The December 9 hearing, Chase broke down the documentation efforts. They were only able to underwrite about 20%, and a plurality provided documentation that was not able be underwritten (see page 3 and 4).

It sounds like Congress is going forward willing to change the law to allow judicial cramdowns, at least.

[Larry]

Ferg,

I think I followed about 10% of that. (And I may be overestimating my abilities.)

Could you dumb it down for me?

[Fergasun]

Since I'm a dork I like to listen to Congressional Hearings. Through these you can follow Congress as they try to figure out what's going wrong with housing. House Judiciary Committee held a hearing on voluntary mortgage modifications in July and one in December. The TARP COP has been talking about this since September at least; when the administration began HAMP (HAMP is pretty much the focus of TARP right now). The House Financial Services Committee was talking about this as well recently with a hearing on problems of housing. They didn't directly talk about Fannie/Freddie as the focus was on these programs to modify loan terms (sometimes as long as 40 years) whether voluntarily or through HAMP.

SO here's basically the problems: in places like Nevada, California, Arizona and Florida, the house values have dropped so far that homeowners have no chance of getting a modification (the loan is for 125% of the home value). Additionally, unemployment is up, so even when people want to stay in their home, some of these people aren't able to produce documents showing they are able to make payments (ie. lost job). There may be some hardship provision in HAMP, I'm not sure. Also, for some reason when people are attempting to modify their loan terms, the documentation is getting lost in the mail, a lot by the mortgage servicers.

There's another option besides voluntary modification or HAMP, and that *would be* cramdown legislation. In this case, judges would be allowed to write-down the principle value of the loans (this is possible for other debts, but not mortgage loans). It sounds like Congress is serious about passing cramdown legislation soon. This is a serious reform that would help these underwater homeowners (or it might now, but its another tool). More on cramdown's see here.

I'm not sure if that helpeld clarify things but my family is up.

[81artmonk]

You didn't provide any "points." You had a graph which showed some figures, all of which didn't tell the entire story. I have asked to demonstrate HOW Obama has "tripled" the spending deficit, and you did nothing of the thing.

Do you REALLY think the bank bailout happened during Obama's term of office, even though it took place in 2008? Do you REALLY think the Obama deficit is at three trillion? Because, as I have posted TWICE so far, the defict was at $1.2 trillion when he entered office in early 2009. Also, if you notice, I said the Obama deficit was at $1.4 to $1.8 trillion, which corresponds with your graph.

I have provided instances in which Bush has increased the deficit and the debt. You have not done the same, but now is your chance to do that. Show me how the spending deficit is at over three trillion, and how this was accomplished

In short, you are, again, being disingenuous, and you aren't even attempting to defend your position, other then to say that people are "screaming at you."

Either show us the money, or don't spread misinformation. As I said before, we cannot honestly discuss the federal budget's woes if we are going to invent "facts."

I supplied a graph and the story(with link) to back it up. If you disagree with the story fine, but the graph used numbers from the CBO. Unless you want to argue with CBO and past facts.

[Thiebear]

What’s driving Obama’s unprecedented massive deficits? Spending. Riedl details:

* President Bush expanded the federal budget by a historic $700 billion through 2008. President Obama would add another $1 trillion.

* President Bush began a string of expensive finan*cial bailouts. President Obama is accelerating that course.

* President Bush created a Medicare drug entitle*ment that will cost an estimated $800 billion in its first decade. President Obama has proposed a $634 billion down payment on a new govern*ment health care fund.

* President Bush increased federal education spending 58 percent faster than inflation. Presi*dent Obama would double it.

* President Bush became the first President to spend 3 percent of GDP on federal antipoverty programs. President Obama has already in*creased this spending by 20 percent.

* President Bush tilted the income tax burden more toward upper-income taxpayers. President Obama would continue that trend.

* President Bush presided over a $2.5 trillion increase in the public debt through 2008. Setting aside 2009 (for which Presidents Bush and Obama share responsibility for an additional $2.6 trillion in public debt), President Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.

Its not like the article is flattering to either side?

(In reference to 81ArtMonks article on page 1) if you look past just the graph.

[Larry]

I supplied a graph and the story(with link) to back it up. If you disagree with the story fine, but the graph used numbers from the CBO. Unless you want to argue with CBO and past facts.

Unfortunately, your pretty graph said absolutely nothing about Obama increasing the deficit.

Which he, and several other people, have pointed out. Several times.

(And which, frankly, you already knew, anyway. Your Talking point is untrue. It never was true. It's been used for months, and it was pointed out as being untrue months ago. But you like the sound of it, even though you know it's not true. So you follow the pattern: Keep repeating untrue statements, point to things that don't say what you claim, and then try to act dumb and superior at the same time.)

[Thiebear]

http://thehill.com/homenews/campaign/74663-dodds-exit-could-help-dems-keep-connecticut-seat

Dodd succumbed to allegations of ethical misconduct stemming from a special mortgage with Countrywide Financial, a cottage in Ireland and a flap over a provision he put into the bailout bill which allowed AIG executives to keep their massive bonuses.

And one of the Major reasons for our current situation will Retire and live nicely on the taxpayer dime probably not suffering the slightest inconvenience.

[Thiebear]

Unfortunately, your pretty graph said absolutely nothing about Obama increasing the deficit.

Which he, and several other people, have pointed out. Several times.

(And which, frankly, you already knew, anyway. Your Talking point is untrue. It never was true. It's been used for months, and it was pointed out as being untrue months ago. But you like the sound of it, even though you know it's not true. So you follow the pattern: Keep repeating untrue statements, point to things that don't say what you claim, and then try to act dumb and superior at the same time.)

Since i started this topic i'll take up for him for the first time ever.

From 81:

it's a proven fact that Obama has raised the deficit quicker and more than Bush had.

What the Link says in the first paragraph:

President Barack Obama has repeatedly claimed that his budget would cut the deficit by half by the end of his term. But as Heritage analyst Brian Riedl has pointed out, given that Obama has already helped quadruple the deficit with his stimulus package, pledging to halve it by 2013 is hardly

and also in the link:

CLARIFICATION: Of course, this Washington Post graphic does not perfectly delineate budget surpluses and deficits by administration. President Bush took office in January 2001, and therefore played a lead role in crafting the FY 2002-2008 budgets. Presidents Bush and Obama share responsibility for the FY 2009 budget deficit that overlaps their

Now i might not know what he was thinking but what he said and what the graph/link say seem to be consistent with the basic premise?

I readily admit that 81 says some off the wall stuff sometimes but a couple of pages of outright killing him over this seems to be wrong on your part, not his?

[Zguy28]

I've resigned that by the time Obama runs for re-election China will own the USA. He's printing money quicker than Milton bradley is for it's monopoly games.

What humors me so, is that people will bring up bush, yet Obama has out spent bush in a matter of months for results that aren't working and he plans on doing more of the same. Which I do believe is the definition of insanity isn't it?

I'm on the Right, and even I know you're full of doo doo.

[Larry]

Since i started this topic i'll take up for him for the first time ever.

Now i might not know what he was thinking but what he said and what the graph/link say seem to be consistent with the basic premise?

I readily admit that 81 says some off the wall stuff sometimes but a couple of pages of outright killing him over this seems to be wrong on your part, not his?

Actually, I'll point out that his original claim was :

. . . Obama has out spent bush in a matter of months . . .

A claim which is outrageously laughable, and which he has yet to admit was untrue. (He's simply moved on to trying to support the next claim.)

When I point out the complete and utter fail of his claim, he attempts to support it by changing his claim to

it's a proven fact that Obama has raised the deficit quicker and more than Bush had.

(A statement which you removed, and then inserted into his next post. And a statement which I have agreed with.)

When someone else also points the outrageous whopper-ness of his original claim, he then posts his spiffy chart, still in his attempt to support his claim that Obama, in mere months, has out spent the entire Bush Administration.

http://blog.heritage.org/2009/03/24/bush-deficit-vs-obama-deficit-in-pictures/

But let's pretend that his point was that Obama had increased the deficit, all along.

(I'll also observe that the chart 81 has posted is

titled

"bush deficit vs obama deficit in pictures", but that,

as people continue to point out

, the chart actually highlights "fy09 vs fyo8 deficits", which are not the same thing at all. But 81 didn't create the title for the pretty picture. He simply tried to claim that it was relevant.)

The Heritage blog piece which 81 quoted:

President Barack Obama has repeatedly claimed that his budget would cut the deficit by half by the end of his term. But as Heritage analyst Brian Riedl has pointed out, given that Obama has already helped quadruple the deficit with his stimulus package, pledging to halve it by 2013 is hardly ambitious.

Contains a nifty little weasel word in it. It's the word "helped".

Yes, Obama helped massively increase the deficit.

So did Bush.

And, frankly, a lot of it wasn't helped at all. I'd bet that a big chunk of the increased deficit is due to the recession slashing revenues. And while I have no doubt that there are several people quite willing to claim that if Obama had simply allowed the Great Depression to happen, we'd all be millionaires today, and we'd own China, I think we can both agree that trying to blame Obama for the recession is laughable. (It's questionable the extent to which you can blame Bush.)

But, again, I'll wholeheartedly agree that Obama was forced, by circumstances he did not create, to do a bunch of deficit spending. And I'll also agree that, if he hasn't voluntarily increased the deficit a chunk, too, that it's only a matter of time before he does.

I don't think it's fair to blame Obama for the deficit yet. But certainly by the time the election is gearing up, he'll "own" a chunk of it.

[81artmonk]

Actually, I'll point out that his original claim was :

A claim which is outrageously laughable, and which he has yet to admit was untrue. (He's simply moved on to trying to support the next claim.)

LOL, So instead of defending my original claim, which I still stand by, due to the fact that no one has used any factual data to refute it, I change gears in order to prove my point. That Obama has outspent Bush, with facts mind you.

Yet you use my FACTS in order to disprove my original point to which you disagree with. THIEBEAR got my point unlike you chasing something in order to make you look right.

Numbers don't lie. say what you want.