Freddie Mac Betting Against Struggling Homeowners

[myrobbins7]

Freddie Mac, a taxpayer-owned mortgage company, is supposed to make homeownership easier. One thing that makes owning a home more affordable is getting a cheaper mortgage.

But Freddie Mac has invested billions of dollars betting that U.S. homeowners won't be able to refinance their mortgages at today's lower rates, according to an investigation by NPR and ProPublica, an independent, nonprofit newsroom.

These investments, while legal, raise concerns about a conflict of interest within Freddie Mac.

Freddie Mac Betting Against Struggling Homeowners : NPR

Gotta love it.

 

[dreVol]

by lunch, this will be used to bludgeon newt

 

[VolsNSkinsFan]

Pretty savvy move IMO

I guess they were trying to hedge

 

[Pepe_Silvia]

The government should cut all ties with Fannie Mae and Freddie Mac. They shouldn't be in the mortgage business.

 

[Bezdomny]

The government should cut all ties with Fannie Mae and Freddie Mac. They shouldn't be in the mortgage business.

+1

Henry Hazlitt in Economics in One Lesson (1946)

Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to “buy” houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment.

 

[DEFENDTHISHOUSE]

The government should cut all ties with Fannie Mae and Freddie Mac. They shouldn't be in the mortgage business.

This!
They should be broken up and sold off, if there is any value there.

 

[volinbham]

So imbedded in the story is the saga of the Silversteins - getting screwed by the system. Yes, they bought a new house at the top of the bubble and no they didn't sell their old house first and no they didn't have enough equity in the old house to cover the drop in value and yes they decided to take a short sale on it and yes they've burned through their 401K so they have very little assets for collateral (and presumably their current house has dropped in value beyond the loan amount). But please, please, please let them refinance...the system is being unfair to them.

Afterall, risky loans never hurt anyone did they?

 

[milohimself]

So who does moral hazard really apply to then?

 

[Rasputin_Vol]

So imbedded in the story is the saga of the Silversteins - getting screwed by the system. Yes, they bought a new house at the top of the bubble and no they didn't sell their old house first and no they didn't have enough equity in the old house to cover the drop in value and yes they decided to take a short sale on it and yes they've burned through their 401K so they have very little assets for collateral (and presumably their current house has dropped in value beyond the loan amount). But please, please, please let them refinance...the system is being unfair to them.

Afterall, risky loans never hurt anyone did they?

They looked old enough to know better than to make the mistakes that they made. Un-*******-believable.