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"a stunning political and economic bombshell"

The One is looking to save the Democrats in November:

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages - one in five - are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama's loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie.

...

What is happening is that the president's approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they -- and their children and their grandchildren -- would be paying for someone else's mortgage woes.

Do you remember Peggy Joseph?  She may just be getting the last laugh:

We have elected those who are setting us on a course that will not end well for this country.

Not end well at all.


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Comments (38)

Desperate times call for de... (Below threshold)
Caesar Augustus:

Desperate times call for desperate measures.

Maybe I'm the only one, but... (Below threshold)
BluesHarper:

Maybe I'm the only one, but even if I get help with my underwater mortgage I'm still not voting for any democrats.

Any want to bet that these ... (Below threshold)
Don L:

Any want to bet that these will be targeted (reparations baby)bailouts?

"It's our turn now!"

That stimulus money had but one purpose; to buy a permanent democrat/socialist party rule in once free America, with working peoples money.

Barrishnokova is starting t... (Below threshold)
914:

Barrishnokova is starting to panic, ummm ummm ummm

He want's to buy your vote, ummm ummm ummm

Unicorns & utopia for all, ummm ummm ummm

November bring's his end, ummm ummm ummm

"The move, if it happens, w... (Below threshold)
GarandFan:

"The move, if it happens, would be a stunning political and economic bombshell"

Yes, it will. You'll note that ONE in FIVE will be 'helped'. That means the other FOUR are going to get screwed. Those who purchased within their means; those who've been making their payments on time; those who've paid off their mortgage without government help.

Those don't sound like very good odds to me.

The fact that they think th... (Below threshold)
zipity:

The fact that they think this move is going to "help" them is proof positive how tone deaf these guys are. This is gonna make the shit-storm the Democrats are going to face in November an F5 tornado. Cannot wait. Chris Matthews, Katy Couric, and the OlbermannDouche will be in tears, just before their heads explode. Yay.

If 1 in 5 (20%) is underwat... (Below threshold)
Cindermutha:

If 1 in 5 (20%) is underwater and gets a bailout, the other 4 in 5 (80%) is going to be just a little bit annoyed about it. Annoyed people vote.

If this does tr... (Below threshold)
irongrampa:

If this does transpire, then I suggest that the government come collect my share of the tax.

I will spend time in jail before one penny of mine is used for such a despicable enterprise.

That would be a horrific pr... (Below threshold)

That would be a horrific precedent. If it happens, it should be the textbook definition of "moral hazard," not to mention "theft."

Barry's been stealing from ... (Below threshold)
914:

Barry's been stealing from peter to give to paul from day one.

This administration is just beggin for a revolution. I think it's on the way.

This latest stunt by Obama ... (Below threshold)
DJ Drummond:

This latest stunt by Obama is about as smart as it would haver been for the Titanic's captain to have assured his crew

"We have the right of way ... the iceberg will swerve".

Yes, they are that stupid.
Yes, they are that arrogant.
Yes, that's your money they hope to buy votes with.

REMEMBER IN NOVEMBER.

Annoyed people also storm B... (Below threshold)
Roy:

Annoyed people also storm Bastilles and invent guillotines.

Barry's been stealing fr... (Below threshold)
Roy:

Barry's been stealing from peter to give to paul from day one.

This administration is just beggin for a revolution. I think it's on the way.

Then, Barry is gonna end up with a sore peter.

Shit. We didn't buy more ho... (Below threshold)
JLawson:

Shit. We didn't buy more house that we could afford, pay on time, held on when it briefly went underwater (the ballast tanks blew, and prices came back up in our area - and since we're in it for the long haul we didn't worry muchy) and now we're going to have to help pay for some other son of a bitch who decided to live above his means and bail when his property values dropped? Where the hell is MY damn bailout?

It's not like we've got some great big stash of money put away that we (the nation) can tap to pay for this - we'll have to go even deeper in the damn hole for this.

All so Obama can buy some votes.

Man, I can't wait to see the resident lefties spin THIS in a positive way.

Go ahead Barry, do it. It ... (Below threshold)
DaveD:

Go ahead Barry, do it. It might look like an excellent move in your twisted little "progressive" mind, but just like every other decision you have made regarding the economy this in the long run will do nothing. You continue to be the perfect poster child for showing that socialism is only as healthy as the private sector upon which it parastizes. If you destroy the private sector, socialism is nothing, impotent. And just like your doing now, you grasp at irrational actions in an attempt to preserve your ideology. You are the most pathetic president to have ever occupied the White House.

The math doesn't work... (Below threshold)
serfer62:

The math doesn't work
If the intent is to cement the minority with adverse dictates then does he gain or lose votes?
The obvious answer is LOSE. The monirity by definition is less and the obvious majority is more...DAH

Yes JLawson. Its real life ... (Below threshold)
914:

Yes JLawson. Its real life or is it monopoly? with Barry issuing promisorry note's that nobody wants, backs or has any left of.

Instead of descriminantly bailing out a sector, just erase everyones mortgage and start from zero. That would be fair. Right Barry.

I'd sure go for that, 914! ... (Below threshold)
JLawson:

I'd sure go for that, 914! We'd promise to spend the morgage payment and stimulate the economy!

(Let's see - new air conditioning, house could use painting, I'd say about 5 more years to a new roof...)

Yeah, we could do a lot with that money!

What no one has mentioned i... (Below threshold)
SEB:

What no one has mentioned is this is not such a good deal for the homeowner. If you are under water by $50K that $50K will become taxable income in the year of the write off. At the 25% bracket that becomes a $12500 tax bill come April.

In is the writer's opinion ... (Below threshold)
Jim Addison:

In is the writer's opinion that this would be done with politics in mind, but he presents no evidence either of political intent or potential effects.

Other than that assertion, it appears to be just another massive transfer of wealth from the productive to the non-productive (Obama voters).

This is where universal suffrage has led us. People who cannot name the three branches of the federal government still get to vote for federal offices. In my state, they don't even have to bother to refer to a sample ballot to "decide" their vote: they can just push one button and vote a party-line ticket top to bottom.

Elections matter. Make sure your friends and families get out to vote, and make sure they understand the stakes. If any of them are Democrats, stage an intervention NOW so they can get the help they need.

SEB -THAT doesn't ... (Below threshold)
JLawson:

SEB -

THAT doesn't matter - what matters is how it sounds and what sound bites can be wrung from it to support the election in November, not what the actual effect is.

And don't be surprised to w... (Below threshold)
OLDPUPPYMAX:

And don't be surprised to watch limp-wristed republicans actually PRAISING Hussein for such a "noble" gesture!!! Remember when McCain literally ENDORSED him!!!

Jim,Our founders p... (Below threshold)
Deke:

Jim,

Our founders put in a requirement to own property in order to vote, they understood, from the begining, that ppl with "true" skin in the game would be much more thoughtful in their voting.

The vote has become so cheapened over the passed 70 yrs that it's now a joke. We have legal cases where bums are allowed to vote and their vote is bought with packs of cigarettes and 6 packs of beer. My Grandfather told me stories, during the Long admin in Louisisana, where ppl were paid a dollar, for each time they voted for him.

We've been told, warned and showed historically, that when the populace is allowed to vote themselves monies from the public treasuries, then it will fail, I'm begining to think we are near that point now, this trial baloon, that's what it is a test to see public reaction to the idea, is a prime example.

Deke, you are right on. Whe... (Below threshold)
WildWillie:

Deke, you are right on. When I learned years ago that our founding fathers thought only land owners should vote, I thought they were elitest snobs. But now I truly see the wisdom in their thoughts. ww

"...just erase everyones... (Below threshold)
John S:

"...just erase everyones mortgage and start from zero..."

To do that the government would have to print about $7 trillion dollars. That would be far cheaper that the rest of the stupid things this administration will try to restart this economy.

The democrats are being hyp... (Below threshold)
Mac Lorry:

The democrats are being hypocritical in that they want to keep giving away money but at the same time pull money back by allowing the Bush tax cuts to expire.

Current estimates are about... (Below threshold)
Rick Caird:

Current estimates are about 20% of mortgages are underwater. Of those, how many are owned by Freddie and Fannie and how many are still owned by banks, REIT's, or packaged into an MBS. Only the mortgages owned by Freddie and Fannie would be eligible. It would be luck of the draw if any particular mortgage were eligible.

I am going to guess Fannie and Freddie own half of that 20% underwater. In that case, 10% are eligible for forgiveness. That means 9 unhappy mortgage holder for every happy one.

Another issue is how does the property get appraised. Are we going to use the same appraisers who over appraised o 2004-2007 and expect them not to under appraise now?

This will be both a mess and a disaster if Obama tries it. It will just create a whole lot more problems than it can possibly solve.

Deke, you are right on. ... (Below threshold)
Deke:

Deke, you are right on. When I learned years ago that our founding fathers thought only land owners should vote, I thought they were elitest snobs. But now I truly see the wisdom in their thoughts. ww

When I was an 18 yr old college student, with mommy and daddy writing a tuition check for me, I thought we should be doing the things that these fools are trying now. It wasn't until I had to pay my own bills, saw how much the government took, and what sacrifices I would have to make in order to create a future that I realized that 18 yr old me should never have been allowed to vote.

So my reward for paying my ... (Below threshold)
LiberalNitemare:

So my reward for paying my own mortgage is to finance the purchase of someone else's chevy volt, and the purchase of someone else's house.

yay for the redistribution of wealth.

If this goes thru - itll be the last damn mortgage payment I make.

Dont worry LiberalNightmare... (Below threshold)
914:

Dont worry LiberalNightmare.


It take's a village, remember. Just think, we all will own share's in all the bailed out house's? WEE!!! Fun, fun. Maybe I will take out a loan against a million dollar bailed out piece of our property and go to Vegas.

I am thinking that's not go... (Below threshold)
ron:

I am thinking that's not going to make any difference....The news is one bad economic disaster piled ontop of another. The uncertainty is so much that the absolute best he gets is braking the fall. I think that people are smarter than that, if this does not take effect immediatly people are not going to just take thier word or even laws...The number of people who trust the democrats is what, in the teens or is it lower..?

Not every one of those 15 m... (Below threshold)
krkrjak:

Not every one of those 15 million under water mortgages were homes purchased at the top of the market or financed with "sub prime" loans. If that nutty plan is executed there's going to be a lot of "poor" home owners laughing all the way to the bank. BTW SEB, if B.O. can pull that off he can also pull off "debt forgiveness" and relieve those benefiting of any IRS obligation to pay tax on the forgiven debt. Jeez what a racket!


"Mortgage equity withdrawals - primarily home equity loans and cash-out refinancings - grew considerably since early 1990s. According to US Federal Reserve estimates, in 2005 homeowners extracted $750 billion of equity from their homes (up from $106 billion in 1996), spending two thirds of it on personal consumption, home improvements, and credit card debt".

So where are Tina S, jim x,... (Below threshold)

So where are Tina S, jim x, or any other of our resident Obama apologists? Why aren't they all rushing in here to polish up this turd?

The democrats are being ... (Below threshold)
john:

The democrats are being hypocritical in that they want to keep giving away money but at the same time pull money back by allowing the Bush tax cuts to expire.

And the Republicans are being hypocritical in that they want to pull money back but at the same time keep giving it away by allowing the Bush tax cuts to remain intact.

Imagine that.

john @ #34 ~ Stuck on stupi... (Below threshold)
Jim Addison:

john @ #34 ~ Stuck on stupid?

The Bush tax cuts were intended to be permanent, negating tax increases that would otherwise have been imposed. The only reason they were limited was because Democrats filibustered them, forcing Republicans to use the reconciliation path, under which they had to be limited.

They have been in force for eight years. Economic decisions of companies and individuals have been predicated upon them. Allowing them to "expire" constitutes a tax increase.

The difference you seem incapable of understanding is that allowing the tax cuts to continue would merely preserve the status quo ante, there would be no new beneficiaries and no newly taxed losers.

Obama's policy has been to hand out cash to his cronies and constituents which everyone else must pay for. On top of this, he will increase taxes.

There is simply no comparison, as even the dull of wit should comprehend.

In his Post Number 8, irong... (Below threshold)

In his Post Number 8, irongrampa suggests that, if this does transpire, the government come to his house and collect his share of the tax.

He goes on to say he would rather spend time in jail before a penny of his be used for such a despicable enterprise.

And I say, God bless and keep irongrampa!

And that We, The People, whose beloved fraternal republic this still is, will defeat the fascists who have stolen our nation -- and who occupy its almost every political and absolutely every bureaucratic office -- only by so insisting.

We must first DISOBEY DC's fascists, then DE-FUND them and, finally, force their DEFAULT on our every foreign and domestic debt!

Let US, for a change, screw the bloody Chinese and every other foreign and domestic enabler of their DC-based fellow fascists.

DISOBEY!
DE-FUND!
DEFAULT!

"The democrats are being... (Below threshold)
Oyster:

"The democrats are being hypocritical in that they want to keep giving away money but at the same time pull money back by allowing the Bush tax cuts to expire."

This is one respect where they're not hypocritical. It's called redistribution and they've been pretty honest about that goal.

Although, it could be argued that while it's their "intent" to redistribute, there will be consequences where what they don't intend will occur and those they profess to be helping will suffer.

But their intentions are good!

What's the road to hell pav... (Below threshold)
JLawson:

What's the road to hell paved with, Oyster?

You know, I'm starting to think this isn't a bad program - but the criteria and process for the folks getting bailouts should be like this.

Did you stay in your house, making the payments, even though your house isn't worth what you paid for it? Then you get a tax credit at the end of the year equivalent to two months payment of your mortgage - principle and interest.

Are you still in the house, paying irregularly on your mortgage (whether for health or lost-job reasons), but have contacted the bank with the reasons, and you're still trying to keep up with the payments? See above - you must file proof of your situation, and you'll receive two months tax credit.

Did you stop paying on your mortgage when the value was less than what you owed, but still live there? Then you get a FREE tax audit and eviction papers, and the government will buy your house for the current value. Any damage done TO the house (judged by an independent appraiser - so don't go yanking out fixtures and countertops and appliances and the like) will be added on to your tax bill for the current fiscal year, plus there will be a 75% penalty on the whole amount.

Did you abandon your house and the payments with no documented effort to contact the bank and work things out? You don't get squat, you freeloading bum, but an audit and an IRS lien on your pay until you pay off the balance you owed on your house. Plus interest.

Put in those 4 criteria, and I wouldn't have much trouble going for this...




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