Fannie and Freddie Get Blank Check For Christmas (Was "This Year In Loan Mods")

(This post has been updated. See below)

Back in February I looked into the question of whether any bad mortgages had been modified at all. The year is now ending, and it turns out my ballpark estimate was right: At least one mortgage has been modified. But the number is still closer to one than the directors of the Home Affordable Mortgage Program want you to believe:

Carolyn Said at the San Francisco Chronicle reviews the numbers:

The net results have been paltry: Just 31,382 borrowers nationwide had received permanent loan mods as of Nov. 30 under the Home Affordable Modification Program (HAMP), the Treasury Department reported. Meanwhile, First American CoreLogic says that 1.7 million homes are likely to be lost to foreclosure next year.

"HAMP is turning out to be something of a disaster," said Lisa Sitkin, an attorney at Housing & Economic Rights Advocates in Oakland, who works with many struggling borrowers. "There are delays and lost steps at every turn. The bureaucratic requirements are endlessly frustrating."

In a world of massive redefaults, that word "permanent" is subject to revision. More recent deep cramdowns of mortgage principal have made a slight improvement in the redefault rate. But what most Americans always believed was a bailout too far is also a bailout too small. There just is not enough taxpayer money in the world to get that five-figure loan mod number up in any serious way.

But the HAMP has delivered a lot of one thing: mortgage modification scams in every state. In fact, the big Boolean challenge in keeping track of mortgage modifications is to separate the actual news from the "Bad Credit? No Problem: If you've been a victim of predatory lending you may be eligible for federal homeowner relief"-type swindles. I'm sure somebody smarter than me can expound on why the language of mountebanks tracks the language of good-government market interventionists almost exactly.

Just in time for Xmas, Specialty Finance Group's Richard Benson sings a carol for the "jingle mailers," people who put their keys in an envelope, mail it to the bank, and disappear:

From the point of fairness and equality, Jingle Mail starts to look like an honest grass roots movement for the little guy like Joe, to get his life and finances in order. The honest, conservative, middle-class American got played for a sucker by the subprime homebuyer and the house and commodity speculators.  The Wall Street fat cats who made it all so easy kept what they stole, and then got bailed out. The government has done nothing for Joe.  Isn’t it his turn to fight back?

While I would dial back some of the victimization rhetoric (because among other things, the jingle mailer gets free use of a house for some period of time), this is a legitimate take. Walking away from a situation you can't handle anymore makes sense for everybody: the borrower, the lender, the prospective buyer, and the United States of America. It's why God created divorce, bankruptcy and foreclosure.

UPDATE: Why wasn't I looking for the buried Christmas Eve story? As John Thacker notes in the comments, the Department of the Treasury announced today that it will lift its $400 billion cap on support for the failed GSEs Fannie Mae and Freddie Mac. More here and here. The Treasury's press release bears the conveniently bland headline "TREASURY ISSUES UPDATE ON STATUS OF SUPPORT FOR HOUSING PROGRAMS" -- because I guess "Merry F'ing Christmas: Your grandchildren will live in penury so we can prop up a bunch of deadbeats and incompetent bankers" was taken long ago.

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  • Johnny Longtorso||

    No article, no text, no comments? That IS a whole lotta nothin.

  • ed||

    All I know is that Ralphie was fortunate indeed to have a mommie like this.*

    *NSFC**

    **Not Safe For Christmas

  • ed||

  • ||

    I'm sure somebody smarter than me can expound on why the language of mountebanks tracks the language of good-government market interventionists almost exactly.

    Sounds like a job for a federally funded think tank. I know some YouTube video stars who live near 14th and U who might be able to help with that.

  • ¢||

    I'm sure somebody smarter than me can expound on why the language of mountebanks tracks the language of good-government market interventionists almost exactly.

    Because you're a racist.

  • juris_imprudent||

    I'm sure somebody smarter than me can expound on why the language of mountebanks tracks the language of good-government market interventionists almost exactly.

    Damn, this is piling on.

    Anyway. The reason for the similarity is that they are intended to fool the same suckers. See, that wasn't so hard.

  • Parodist||

    I'm sure somebody smarter than me can expound on why the language of mountebanks tracks the language of good-government market interventionists almost exactly.

    In the words of Tom Lehrer:

    Plagiarize!
    Let no one else's work evade your eyes!
    Remember why the good Lord made your eyes!
    So don't shade your eyes,
    But plagiarize, plagiarize, plagiarize!
    Only be sure always to call it, please, research.

  • ||

    I'm sure somebody smarter than me can expound on why the language of mountebanks tracks the language of good-government market interventionists almost exactly.

    All con artists think alike.

    TANSTAAFL!

  • ||

    Meanwhile, First American CoreLogic says that 1.7 million homes are likely to be lost to foreclosure next year.

    Ugh. The homes are not "lost". They are sold to someone else. At a lower price. Some other poor person gets to buy a home without going as deeply into hock for it.

  • Jeffersonian||

    Unless they're in Detroit, where they succumb to nature in some post-apocalyptic process.

  • ||

    From the point of fairness and equality, Jingle Mail starts to look like an honest grass roots movement for the little guy like Joe, to get his life and finances in order

    Except for further screwing over renters.

    Walking away from a situation you can't handle anymore makes sense for everybody: the borrower, the lender, the prospective buyer, and the United States of America. It's why God created divorce, bankruptcy and foreclosure.

    And walking away from a situation that you can handle but don't want to?

    Housing rates are low (and loans non-recourse) because there's a big cultural assumption and traditional behavior that people will try to pay if they can at all, leaving the system to be generous in bankruptcy and foreclosure to those that can't. These recommendations "for the little guy" will take us to a world where prepayment penalties, recourse loans, and everything else are the order of the day. Perhaps that's what people want, but it will end up, yet again, screwing over the people who didn't buy a house that they can't afford but would like to buy a home in the future.

  • ||

    And the Treasury just removed the cap on Fannie and Freddie aid. They now have a blank check.

  • Johnny Longtorso||

    Damn that free market.

  • Ebeneezer Scrooge||

    You mean, my cake is now free and I can still eat it too?

  • ||

    Gee, I didn't know I could afford that sort of gift this year.
    But it looks like I'm gonna anyhow......

  • Ebeneezer Scrooge||

    So what do you think will cost more Tim:

    1) ObamaCare
    2) ObamaCarbonTax Inc.
    3) ObamaMortgage

    I humbly submit that if you add up the net long term costs of ObamaCare alone, it will far exceed Iraq and Afghanistan put together. By the time it's done, the US defense industry is going the way of western Europe (read: no money for a military).

    Here be it known: I hate the Republican Party. But at this point I'm quite prepared to vote for them. Even if it means voting for Sara Palin.

    The Democrats have no more respect for civil liberties than the Republicans. Which means at this point, the Republicans are in fact the lesser evil.

  • ||

    The honest, conservative, middle-class American got played for a sucker by the subprime homebuyer and the house and commodity speculators.

    SIUYA

  • ||

    "SIUYA"

    I have been online for 16 years and I swear to God I still can't figure out where some of these acronyms come from, or what they mean. I grant that I may be an utter idiot. But, like, where do y'all come up with this stuff? Or more to the point, I guess: Where do you encounter this acronym in such regular usage that it has become second nature for you to use it?

    I'm genuinely curious, and sorry to be such a language geek/general idiot.

  • ||

    "Where do you encounter this acronym in such regular usage that it has become second nature for you to use it?"
    I think your presuming a familiarity that isn't there.
    I'd never seen that one before, but it didn't take long to figure it out.

  • ||

    "I think your presuming a familiarity that isn't there."

    Well, you may be right. In which case, I would normally follow up by asking, "OK, what the hell compels people to acronymize a quick little expression they could just as easily type out, and thus more effectively convey their point," except that I think P Brooks is a fine enough fellow so I won't do that to him.

  • ||

    Tom|12.24.09 @ 8:27PM|#
    "acronymize"
    I'll bet your spell-checker gave you hell over that, but Merry Christmas anyhow.

  • Rich||

    What Ron L said.

    However, if you're still having trouble, here's a hint: the middle three words are "it up your".

    Acronymfinder.com can sometimes be helpful.

  • ||

    Oh yeah, I got it. Urban Dictionary on this one. Just a handful of votes there, though, so I think you and Ron are right on the familiarity front.

  • Gilbert Martin||

    Strange that all the leftists who keep ranting and raving about the evil bankers and bail outs for publicly traded banks never utter a peep about the Fannie and Freddie bail outs.

  • ||

    Don't you understand? Profit is evil and must be taxed and discouraged, but a government program (or lefty "activist" group like ACORN) has good intentions and is thus a good thing, even when it goes bankrupt or is deeply corrupt. The fact that the head of Fannie Mae who took it to collapse was a black Democrat is a factor as well.

    It'll be fascinating to watch the next few years. There are all sorts of juicy stories like this dangling in front of the noses of the investigative reporters of the mainstream media. How long will their ideological biases hold out? Don't you think that at some point they won't be able to resist doing some real reporting, even if it hurts their side?

  • ||

    I'd think that the New York Times would like to be relevant again. Thinking of the good a little honest reporting could do, I can't understand why someone won't explain the costs of these programs to the people. Unfortunately, newspapers are in on the Cloven-Piven strategy of totally collapsing America.

  • ||

    Hmm. $400 billion for Fannie and Freddie. $180 billion for AIG.

    I wonder what they might be doing with all that money. I WONDER.

    Meanwhile the banks are paying back their loans from the government.

    I mean, it couldn't possibly have anything to do with the fact that Fannie and Freddie are buying up bad mortgages and AIG is paying off paying off credit default swaps at above-market rates.

  • ||

    Follow the money. I was wondering when somebody would dig up the dirt on this guy.

    http://tinyurl.com/y8rbqo9

  • ||

    Solution to the housing/mortgage problem. Invest Social Security and Medicare Money. Invest in America at the grass roots over the long term. Buy the failing mortgages, at a discount, with current SS & MC funds and the IOU's we all know exist. In vest in America's housing over the long term and support property values with our mutual labor, good faith and credit.

  • ||

    amazed|12.24.09 @ 9:03PM|#
    "Solution to the housing/mortgage problem. Invest Social Security and Medicare Money. Invest in America at the grass roots over the long term. Buy the failing mortgages, at a discount, with current SS & MC funds and the IOU's we all know exist."

    Can I presume you're being sarcastic?

  • ||

    No, serious. This would be the best investment of SS and MS funds to extend benefits beyond current projections.

  • ||

    You seem to think these funds are sitting in a vault or a "lockbox" in Washington. They're not. They're constantly being spent on Social Security and Medicare benefits.

  • ||

    amazed|12.24.09 @ 9:03PM|#
    "Solution to the housing/mortgage problem. Invest Social Security and Medicare Money"

    There *isn't* any S/S or Medicare money! Both programs are broke!
    What's there is a bunch of IOUs 'promising' money which has been spent elsewhere. There is *no* money for either program, unless the gubment leaves the printing presses running.
    But Merry Christmas anyhow; hope you like the gifts you bought for all sorts of folks you never met.
    I'm not expecting any "thank you" cards.

  • ||

    Has anyone asked for an accounting? There must be IOU's in some form. These IOU's have value guaranteed by the great USA. Trade these IOU's for the damaged mortgages held sundry structures -- at a discount of course. Then re-write those mortgages and hold them over the long term. Revive Economic growth, salvage SS. I'm sure the banks and investors will be willing to hold the IOU's.

  • TallDave||

    The IOUs are from the gov't to the gov't. They're meaningless.

    You're basically talking about a giant debt issuance.

  • TallDave||

    The IOUs are from the gov't to the gov't. They're meaningless.

    You're basically talking about a giant debt issuance.

  • chemman||

    There really hasn't been any real SS money since 1963 when SCOTUS ruled that congress could spend the money any way they pleased. So they did. IOU's exist but where will they get the money other than by the FED printing more to redeem them?

  • ||

    The SS IOU's have value. Stand them against the poorly performing mortgages. The money shows up as people repay their revised mortgages. Over the long term; property values increase, the value of the SS IOU's increase and SS is salvaged.

  • TallDave||

    No, they don't have value, because they don't exist. An IOU to yourself has no meaning in financial terms.

    The debt markets don't care what you call a new debt issuance, it will still be considered a new debt issuance.

  • The Libertarian Guy||

    From CNN Money:

    NEW YORK (CNNMoney.com) -- Top executives at mortgage finance giants Fannie Mae and Freddie Mac, both of which have been under government control since last year, received millions of dollars in pay in 2009, according to documents filed by the companies Thursday.

    The chief executive officers of each company got annual pay packages worth $6 million apiece, while other top execs pulled in at least $2 million. ...

    WTF? Why are these idiots getting paid THIS much for quasi-governmental jobs? Fuck that, pay 'em a pittance.

    IF they were private-sector bosses, scratch the above. But these pig-fuckers are getting paid on OUR dime. Bugger that.

  • crayon in absentia||

    HURR DURR!!! NOT PAY GOVERNMENT BIGWIGS BIG MONEY!!! HOW STUPID!!!

  • Suki||

    LOL

  • ||

    Where do you encounter this acronym in such regular usage that it has become second nature for you to use it?


    Many years ago (not necessarily pre-computers but certainly pre-Intartubes), I had a friend who routinely used the expression "SIUYA".

    I had not even thought about it for years; reading that paragraph in Tim's post, it just jumped into my head.

    It seemed.... appropriate.

    I'll be keeping it handy, henceforth.

  • Just Sayin'||

    A friend from my days in the military used to say "up your ass with Mobil gas - happy motoring" which would be UYAWMG-HM.

  • ||

    Dude that is totally insane dude!

    RT
    www.Ultimate-Privacy.Net

  • TallDave||

    As John Thacker notes in the comments, the Department of the Treasury announced today that it will lift its $400 billion cap on support for the failed GSEs Fannie Mae and Freddie Mac.

    This truly is insane. The initial "overly generous credit in pursuit of social justice" scheme collapsed and took a big chunk of the financial sector with it, and their solution is... even more generous credit!

  • James||

    Really very impressive that this was allowed to happy. I think they are eating crow now. Not a single person trust them to even hand out a short term loan, much less a mortgage.

    I really enjoyed the read. thanks.

  • Jbayer||

    Amazing what this has done for us so far. Amazing that it hasn't helped that is. Not sure I like the loan mods conversion rate and the paperwork thuggery involved by our mortgage companies.

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