« | »

Treasury To Force Lower Mortgage Rates

From a slow to learn Washington Post:

(L-R) Victoria Lopez, Soledad Martinez and Amelia Rangel rally ...

[Profession protestors from ACORN] (L-R) Victoria Lopez, Soledad Martinez and Amelia Rangel rally to ask state lawmakers to stop home foreclosures and help modify loans at the State Capitol in Sacramento, California November 25, 2008. The U.S. Federal Reserve threw a massive life-line to consumers on Tuesday with two new programs aimed at making it easier for them to obtain loans for homes, cars and on credit cards. The new mortgage-support facility was intended to strike at the collapsed housing market, the core of the United States’ economic woes.

Treasury Weighs Action on Mortgage Rates

Intervention Would Aim to Buoy the Housing Market by Forcing Down the Cost of Loans

By David Cho, Zachary A. Goldfarb and Dina ElBoghdady
Thursday, December 4, 2008; A01

The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal.

Under the initiative, the Treasury would offer to buy securities that finance newly issued loans for home purchases, according to the sources. But to participate in the government’s program, mortgage lenders would have to set exceptionally low interest rates, for instance, no more than 4.5 percent for traditional, 30-year fixed-rate loans.

These securities would be purchased primarily from Fannie Mae and Freddie Mac, the financing giants that buy most mortgages from U.S. lenders, according to sources who spoke on condition of anonymity because the plan has not been finalized.

The cost of the plan and source of funding remain unclear. One possibility is for the Treasury to raise money by issuing bonds to the public at 3 percent interest. This could allow the government to turn a profit because it would be buying securities that pay 4.5 percent.

At a meeting attended by the Treasury’s Interim Assistant Secretary for Financial Stability Neel Kashkari and the National Association of Realtors in mid-November, senior Treasury officials said they were optimistic that subsidizing lower mortgage rates with taxpayer dollars would help revive the housing market, sources said.

Treasury officials told the Realtors that the plan could be a more effective way to help homeowners than focusing efforts solely on borrowers who are struggling to meet their monthly payments, the sources said. Democratic lawmakers have been advocating a proposal to modify the mortgages of distressed homeowners.

A source said Treasury officials suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.

Treasury officials described the situation as fluid and said the plan was still being finalized, according to people in contact with the department. The officials expressed concerns yesterday that premature disclosure of the plan could prompt Americans to put off buying homes and hold out for a better rate, sources added…

The initiative under review at the Treasury would be an alternative. Borrowers would have to meet standards set by Fannie Mae, Freddie Mac or the Federal Housing Administrations that include documenting their income, sources said. Fannie and Freddie were put under government control in September…

As we have oft noted, history may not repeat itself, but stupidity sure does.

For wasn’t this exactly what caused the mortgage problem in the first place?

This article was posted by Steve on Thursday, December 4th, 2008. Comments are currently closed.

4 Responses to “Treasury To Force Lower Mortgage Rates”

  1. bill says:

    Tale of three bubbles, there was the internet bubble, which was replaced with the housing bubble, which has now been replaced by the final bubble, the devaluation bubble.

    Welcome to trickle down poverty.

    This is a sure sign as any that it’s not working.

  2. proreason says:

    “The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry”

    The government is now the worst enemy of the country. Al Queda is on the run, but the idiots in government are on the rise.

    Lemme remember…..what was it that got us into this economic pickle in the first place…..oh yes…..”intervening directly in the mortgage industry”, that was it

    Rhetorical question…….if you eat something and it makes you vomit, do your cure the problem by eating more?

    These people are IDIOTS.

  3. GuppyNblue says:

    “A source said Treasury officials suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.”

    How about a grass roots campaign to start kicking this foreign scum’s asses out of town. In the caption we have Victoria Lopez, Soledad Martinez and Amelia Rangel of ACORN asking state lawmakers to stop home foreclosures. This is like mugging someone then coming back the next day to ask for a few dollars more. Are we just testing the limits of absurdity?

  4. Barbie says:

    Borrowers would have to meet ‘standards set by Fannie Mae and Freddie Mac’? Now that’s reassuring… (not)

« Front Page | To Top
« | »