Thursday, September 23, 2010

Fannie Mae Press Release - Just for Laughs

As we've outlined in countless stories on the website, the 3.5% down for home mortgages is a bar far too high for the new American home renter owner.  0% down was such a winning strategy mid decade, that the government has decided to use its arms of Fannie and Freddie to introduce similar programs.  [Sep 10, 2010: Zero Down Mortgages Restarted by the Biggest Subprime Lender in Town - Fannie]  And when its not an explicit "zero down" that tend to raise the ire of wacky bloggers, there are cool workarounds so it's less obvious. (see below)

Such as today's news release, hot off the presses:
  • Fannie Mae (FNMA/OTC) today announced a seller assistance incentive on Fannie Mae-owned properties listed on the company's REO website,, and expands the initiative to offer an incentive to real estate agents and brokers. Qualified homebuyers who will be owner-occupants can receive up to 3.5 percent of the final sales price that can be used toward closing cost assistance, including a home warranty, if desired and available. In addition, selling agents representing owner-occupants will receive a $1,500 bonus
  • Eligible offers must be submitted on or after September 23, 2010, and must close by December 31, 2010. The sale must close within 60 days of the offer being accepted.

Translation: This is a zero down mortgage in FHA world, except we have camouflaged it by calling it a "3.5% towards closing cost" program. (this is where you laugh)  As an added bonus to the realtors association (one of the government's largest lobbyists) here is $1500 thrown in since everyone is a winner in the new America

No worries taxpayers, it's only money.  When Fannie and Freddie come to ask for their quarterly bailout from the taxpayer, please try to forget about programs like this.

With wonderful program like this it's a wonder existing home sales are so pungent.


On a completely unrelated note:
  • The Obama administration's flagship mortgage-relief effort is failing to ease the foreclosure crisis as more than half of those who have enrolled have fallen out of the program.  As of August, approximately 680,000 homeowners who applied to get their mortgage payments lowered, or about 51 percent, have been disqualified.
  • ....the Treasury Department initially allowed banks to sign up borrowers without collecting proof of their income. (Mark's note: collecting proof of income? an outrageous standard!) In the end, many homeowners were unable to provide that information.  (what you mean I can't get a $230K mortgage just by writing down "I make $82,000.... trust me" on a form, like I could in 2006?)

Now for you and I, a 50% failure rate might seem like poor performance but I starkly recall a housing official (I can't recall which arm of the government he represented) on CNBC maybe a year or so ago claiming that even if half the monies spent on such programs were pissed away it was still a success.  (I only remember because my jaw had to be pulled up from the floor)  I would love to be graded on the 'government curve'.

Therefore, as we sit here 12, 18 months later - I want to shout from the mountain top that the burning of 1 out of every 2 dollars of taxpayer money is a 'success'.  No worries people - any money thrown into a black hole can be printed up by Ben Bernanke in the "everyone wins" economy.  Go forth and shop buy a home for nothing down.3.5% towards your closing costs (wink wink, it's not a down payment replacement).. or the terrorists have won.

  • "The problem is just so huge in magnitude that there's no viable solution that can come out of the government to solve it," said Anthony Sanders, a finance professor at George Mason University.
Shh... Mr. Sanders.  It will be allright.  We have new zero down (wink wink) programs to fix all this.  We'll get through this, taxpayer massacre of not.  [Jan 5, 2010: WSJ - The Treasury Department's Christmas Eve Masscare of the US Taxpayer]  Look at the pretty stock market go up - this tells us all is well.  In the meantime, please accept this blue pill on my behalf.... now close your eyes... it will all be better soon.  An as aside, if you wouldn't mind writing a check for $1500 so I can hand it to my local friendly realtor, it would cut out the middle man.  We all need to do our part as taxpayers to make sure our fellow citizens get into homes for less than it requires to put down a deposit on a rental apartment.

  • ..... of last month, only about 449,000 borrowers have received permanent loan modifications and are making their payments on time. That's only 34 percent of the 1.3 million who enrolled.

I love life inside the Matrix.

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