"Just a minute... just a minute. Now, hold on, Mr. Potter. You're right when you say my father was no businessman. I know that. Why he ever started this cheap, penny-ante Building and Loan, I'll never know. But neither you nor anyone else can say anything against his character, because his whole life was... why, in the 25 years since he and his brother, Uncle Billy, started this thing, he never once thought of himself. Isn't that right, Uncle Billy? He didn't save enough money to send Harry away to college, let alone me. But he did help a few people get out of your slums, Mr. Potter, and what's wrong with that? Why... here, you're all businessmen here. Doesn't it make them better citizens? Doesn't it make them better customers? You... you said... what'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save $5,000? Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him. But to you, a warped, frustrated old man, they're cattle." George Bailey "It's a Wonderful Life"
Bloomberg- "U.S. Treasury Secretary Timothy F. Geithner will present Congress with three options for reducing the government's role in the nation's housing finance system and shrinking the footprint of mortgage companies Fannie Mae and Freddie Mac, according to two people familiar with the plan."
The Federal National Mortgage Association (FNMA) Fannie Mae was set up as part of the New Deal. Originally, it was a freestanding publicly traded company it was changed in 1968 to a government sponsored enterprise. The purpose of Fannie Mae was to allow banks to issue mortgage loans, then the lending institution could sell that mortgage to Fannie Mae and receive new capital to make more loans.
The purpose, was to help increase the level of home ownership for America's middle class. Before the New Deal most home mortgages were only fifteen years with a large down payment and a large payment at the end of the note. By assisting American's to buy a home, it does make them better citizens. It makes them taxpayers. It creates jobs, renters don't spend the money that homeowners will spend on shrubs, blinds, wallpaper or any of a thousand other sundry items. This is important to take note of, the Democratic administration of Barack Obama is actively participating in the dismantling of government assistance for home mortgage loans.
This is a Republican wet dream, Federal Reserve toady Tim Geithner can barely hide his erection. Under the Dodd-Frank financial regulatory overhaul enacted in July, the administration was required to submit to lawmakers a plan for ending taxpayer support for Fannie Mae and Freddie Mac. Geithner will propose the administrations plan in the near future, three options are seen. The first option, discontinuing government support all together. Second, to phase out government support of mortgage backed securities making the government the lender of last resort. The third option is raising fees, to guarantee repayment by forcing home-buyer to pay an insurance premiums for lenders.
This is your government punishing the victim instead of the criminals. Banks and lending institutions are chartered and licensed and not one home mortgage was ever given to the public that was not approved of by the lender. The lender then takes these loans to Fannie Mae and Freddie Mac and says, please give us face value for these loans.
The administration is privatizing the mortgage market. Now after your jobs are gone and industries have gone overseas, after they've privatized your health care they are going to make home ownership so expensive that most working people will never be able to afford their own a home. Couple this with the assault on Social Security and Medicaid and you have the greatest abuse of a Democratic populace in American history.
The mortgage crisis has rewarded the criminals at the expense of the victims. Under the terms of the TARP agreement, banks can present the deed for a foreclosed property and the Federal Reserve will issue credit in the amount of the loan loss. The FDIC then auctions off these properties to lenders and investors for as little as twenty two cents on the dollar. No money down, with zero percent interest. A $200,000 home for $44,000 no money down! "Can't you see? Potter's not selling Potter's buying!"
Fannie Mae and Freddie Mac, your only friends in the finance industry, are about to be done away with. You will then pay the mortgage rates and fees that the banks feel like charging and where are you going to go? What option will be left for you when private industry makes all the decisions.
Renters are less likely to vote than property owners. Landlords don't pay property taxes tenants do! Rents are based on a thirteen month year to allow for one month's vacancy. So renters will pay more for the same than home than property owners. I've lived in a mid sized town and I've seen the affect two or three large property owners can have on the Real Estate market. Once Uncle Sam is out of the picture the mortgage banks and REIT (Real Estate Investment Trusts) will own it, lock, stock and barrel.
The government didn't get into the mortgage business because the banks were doing such a great job of it. The government got into the mortgage business because the banks had made it nearly impossible for working people to get a mortgage. Imagine, 20 percent down and then fifteen years to pay the loan off. A $200,000 loan would mean $40,000 down plus escrow with payments of around $1,200.00 per month. Now most responsible lenders would want to keep that mortgage payment at around 25 percent of your income so you would need to earn nearly $60,000 per year just to qualify for the loan.
Now consider that the average American family income is around $47,000 and that most Americans have zero savings. Unless you were a veteran you would have nowhere to turn, those are the terms take it or leave it. Home ownership like health care will pass away, priced right out of the average families reach. Why the FDIC commercial investor buying that home for $44,000 could afford to rent it to you for around $800 per month. That will give him room for a sinking fund for upkeep and a fifteen percent profit amortized over ten years after which time, it's all gravy.
Keep in mind that the mortgage market is f*cked right now anyway. Even if we had a good economy there are years of housing and commercial building oversupply. That is why there is so little fighting over this, whose going to fight for you? The only friend you have in the mortgage industry is the government and under the corporate fascist regime of Barack Obama, that means that you have no friends.
Under the administration of both these parties the means of production are private property, production is carried forward for capitalist profit purely, markets are glutted and industry paralyzed, workingmen become tramps and criminals while injunctions, soldiers and riot guns are brought into action to preserve "law and order" in the chaotic carnival of capitalistic anarchy."
Eugene V. Debs 1904!
What Debs was saying over one hundred years ago has never been more true than today.