Lots more media/blog reports on HAMP and Fannie/Freddie change:
Many Republicans call it socialism and are against any government help for home owners.
12-26-09 - Geithner’s Christmas Eve Surprise
Obama administration via its Treasury Department quietly completed the government takeover of the housing industry.
On Christmas Eve, Treasury announced that it would provide unlimited support to Fannie Mae (FNM) and Freddie Mac (FRE) for the next three years. All losses they incur will be funded by the taxpayer and instead of mandatory reductions in their mortgage portfolios, the two will be permitted to once again grow their asset base.
Given that there currently exists no meaningful private market for mortgages in this country and the last pretense towards Fannie and Freddie as private entities has been stripped away, it seems pretty clear that from this point forward the control of residential mortgage finance has been ceded to the federal government.
But what does it mean for the immediate future? The Business Insider has a good, short-list of possible implications. You can check them out for yourself but I did find the first item of interest:
Revisions to the flagging Homeowner Affordable Housing Program (HAMP). Any changes will likely increase near term bailout costs to Fannie and Freddie if HAMP’s current reliance on interest reduction is replaced in part by principal reduction. The losses associated with a modification of a loan using an interest rate reduction are spread out over time while a modification using principal reduction results in taking a more immediate loss.
In an attempt to limit the damage the economy does to their majority in the 2010 elections, the administration is likely to go all in on mortgage modifications that require principal reduction. They can only take so much skin off of the banks in this effort and the last thing they want is to put the financial system back in another crunch. That leave Fannie and Freddie as the vehicles to bail out homeowners that so far have resisted efforts to “save” them. It makes perfect sense that the Treasury’s announcement of unlimited support would be followed by a big, new homeowner bailout program.
Source:
Geithner?s Christmas Eve Surprise
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Typical Republican Reaction all negative while for HAMP it might be positive:
12-27-09 - Washington Post - U.S. promises unlimited financial assistance to Fannie Mae, Freddie Mac – By Zachary A. Goldfarb – The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.
By promising to keep the companies solvent, the government can maintain its sweeping power over the housing market. Fannie Mae and Freddie Mac have played a central role in Obama administration policies to keep mortgage interest rates low, restructure unaffordable mortgages, stop foreclosures and funnel money to housing programs around the country.
Fannie Mae and Freddie Mac have long been targets for Republicans, who say they are evidence of how government support for the housing market contributed to the financial crisis.
"The Obama administration's decision to write a blank check with taxpayer dollars for the continued bailout of Fannie Mae and Freddie Mac is appalling," said Rep. Scott Garrett (R-N.J.), a member of the House Financial Services subcommittee that oversees Fannie Mae and Freddie Mac. "Not only is this a continued bailout of failed entities that need to be privatized to protect the taxpayer, the timing of the announcement is clearly designed to try and sneak the bailout by the taxpayers."
Source:
washingtonpost.com
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12-27-09 - A Questionable Housing Policy (HAMP the negative view)
This article questions a study that higher home ownership rates are good public policy vs renters.
"Many of those involved in the HAMP program have had handed to them a no-lose proposition. They drag their feet while they live rent free and each time they hear that this is the last best offer, they see another moratorium or new offer come down the pike. Genius is not required to conclude that at the end of the day the government is going to do whatever it takes to avoid any further deterioration of the market. Street smarts suffice.
One can accept the assertion of the Fed study that positive results do accrue to the nation from a higher rate of home ownership and at the same time ask what should be the cost of securing those benefits. Unfortunately, it seems as if we view those externalities as priceless, ergo there is no limit on the amount of money we should expend to stave off a decline in the rate as a result of negative equity. That’s a questionable policy position."
Source:
A Questionable Housing Policy -- Seeking Alpha
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12-26/09 - Fannie and Freddie’s Huge Christmas Bonus
While Americans across the country hustled and bustled for last minute gifts and holiday preparations, our wizards in Washington tied a big red ribbon on a blank check made out to Freddie Mac and Fannie Mae. In the process, a future of socialized housing finance has been increasingly solidified.
Why would the Obama administration pass this blank check under the cover of darkness on December 24th? In hopes that America had just settled down for its long winter’s nap and would miss this act of pillage and plunder.
Let’s take note. Let’s ponder this development. What exactly does a blank check and unlimited access to bailout funds truly mean? I envision the following:
1. A total lack of discipline and accountability in the distribution of taxpayer funds.
2. A full government takeover of the U.S. housing finance industry.
3. A socialized housing policy and accompanying programs.
Blank checks are no way to run a country!! Capitalism has been under assault all year long and this year end shot is the ultimate kick in the balls.
These bums must be thrown out.
Source:
Fannie and Freddie’s Huge Christmas Bonus | Sense on Cents 
Re: HAMP REVISIONS may be a reason for the 12/24 removal of Fannie/Freddie Bailout Caps & Thumbs Down on Trials 
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