Era of Responsability

Posted on July 1, 2009 by jck

Fannie Mae and Freddie Mac will begin refinancing mortgages with loan-to-value ratios of as much as 125 percent as the Obama administration seeks to..

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2 Responses to Era of Responsability

  1. jck says:
    July 2, 2009 at 8:27 am

    Economically, I agree, it doesn’t amount to much. Just the principle of the whole thing, I find odd.

  2. David Merkel says:
    July 2, 2009 at 5:05 am

    This is just a covert means of bailing out low end housing prices — though, two things:

    1) Refi at 125% of appraised should not lower many payments, at least not by much, and it doesn’t solve the fundamental inversion of owing more than something is worth, and the incentives to give up after cash flow gets crushed by some disaster.

    2) The low end doesn’t need as much help now — we haven’t bottomed there yet, but the bottom is probably 10-15% below current prices.

    I don’t think it will amount to that much aside from more losses for the GSEs.