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HUD’s Donovan: Fannie, Freddie Should Embrace Loan Forgiveness

    • Hold the line, Florida. No more checks. Let them trash you, deride your home, criticize your timing, etc. The bailed-out banks have enough of my money. Stop paying and they will deal. Keep paying and you enrich the 1%. No more checks. Let them meet you in court, or deal on the nut. Interest rate adjustments the banks opted to skip? Well, now they have a costlier problem. Stop, Florida. Let them sweat this one out. They can’t get the house without going thru court, a 12- to 18-month proposition.

    • Wow, this guy is seriously FOS.

    • No more free handouts. They paid too much for a house they couldn’t afford. Make them pay what they signed their name to. They should have known better but they wanted to act like they were richer than they really were. Why should we give them anything. And Florida Defaulter – I hope like hell they get whatever you have left. Its people like you that have cost those of us that have paid our bills.

    • When are these idiots going to figure out that there is no such thing as a “free lunch?” Any reduction in loan balances has to be paid for by somebody. If Fannie and Freddie reduce loan balances, that somebody is going to be the taxpayer. Why should taxpayer dollars be used to reduce anyone mortgage balance? If you do it for one person, how do you justify NOT doing it for anyone else that holds a mortgage?

      “If a family is in their home for 10, 15 years and has no hope of being able to build equity again, they’re going to give up at some point.” What a load of crap. Markets go up as well as down. If you stay in a home and continue paying your mortgage you always have the possibility of building up equity again. It may not happen next month or next year, but it is certainly likely to happen over time.

      All levels of government need to stop fiddling around with the mortgage market. Let market forces clear it and it will recover on its own.

    • Agree completely with Former Union Member…..if you signed the paper, you are bound by the terms. Loan forgiveness by governmental agencies means TAXPAYERS get stiffed for the balance. Plenty of ways to “work with” underwater borrowers, like payment modification, payment holidays, etc., but I am appalled at the ease with which Americans now think its ok to “walk away” from their obligations. Do not forgive debts, its wrong from every point of view. Florida defaulter, you are a shame on America and the millions of hard working people who will accept their Personal Accountability for what they’ve signed up for.

    • This scenario is a complete red herring. If you have been in a home for 10-15 years, and have not refinanced to pull cash out of your home, you are not underwater on your mortgage.

      However, if you refinanced to put in a pool, or buy a new truck, had a 5 year ARM rate or invest in additional properties, like most of those that are underwater in Florida and California, then you were a speculator and not really a responsible homeowner. Given this, make your payments and wait for the market, or default and start renting again.

    • I agree guys, you signed the paperwork (contract) you are responsible for the payments. I am very tired of the lack of responsibility that people are taking by not researching what they sign and then blaming the bank or some other business.

      I have a mortgage and I will pay it back, it is MY responsibility, not the governments or some kind of handout. We really have weakened “our handshake’ when it comes to business agreements. Quit giving easy walk-away terms for people to just through their hands-up and walking away. Once they start on that habit, it will never end.

    • The insanity from these people never stops. The only way to save America is to vote Republican in 2012!

    • Florida defaulter, you should just be ashamed of yourself. Maybe you should have someone else record what you wrote, and then listen to it as if it were coming from someone else…

    • The Federal government lacks the courage to address the entitlement monster, and instead seems determined to manage the decline of the nation through policies of encroachment, redistribution, and misdirection to populist issues. Thinking in those term, this idea is a trifecta; so it won’t die the quick death it deserves.

    • Being in the business for 7 years, I agree that people should be more responsible about paying their bills and I do see a lot of drama like “oh the banks are taking the homes back and leaving people homeless” that I disagree because when you get a mortgage you sign a contract with the banks and you KNOW they will take your home back if you don’t pay it. But I have seen a lot of genuine cases of people needing help, people that truly believe they were buying their homes in the right moment, others that lost jobs or got salary cuts and needed to renegotiate without being in default, struggling to pay their mortgage and the banks wouldn’t talk until they were actually 60 days or more in default. I miss having the balance. That is the problem.

    • Sure, such stuff is easy for Donovan to say when it involves spending other people’s money…

      No more bailouts, not for companies, and not for individuals!

    • @fred, you must be retarded. Republicans are a bunch of low IQ pandering zealots, and if they appeal to you, it’s a diagnosis. Republicans sponsored the repeal of Glass Steagal, which led to the financial crisis. But dumbasses like you are too easily persuaded when fake morality and bible is waved in your face, I guess. It’s precisely because of ignorant people like you that America is seeing its last days as the first world nation. It’s amazing to me that Neanderthals like you even exist, you should find a time machine, climb inside and go back to the 14th century where you rightfully belong, you pea brained moron.
      Now all that being said, people who borrowed and can’t pay should be held to their contracts. The contracts have default provision. You walk away, the bank gets the collateral (the house). Any write downs would be another disaster for this country, if one could imagine our straits any more dire.

    • Principal writedowns, forgiveness whatever you call it ensures you nothing more than taking a few strategic defaulters out of the mix. Fannie and Freddie need to continue to work on real solutions to keep people in their houses. Payment is king when you are against the ropes, get the payments down and people will find a way to make them. Knowing I will have a nest egg in 15 years is the least of the worries of the common late payer. Also, it will cost a substantial amount to re-work systems at both agencies, neither is set up to do this type of massive write-down on a loan level that it would cost millions to upgrade the internal systems to make this work. The recent payment abatement of unemployed workers for 6 months was great news for the unemployed, the HARP II refinance for below water mortgages will help thousands of people who have been stuck at 6.5% for the last few years and by the way ARM borrowers payments have probably dropped below the fixed rates already. This would have been 100 times worse if rates had not dropped in the last few years. Borrowers have been given multiple life lines principal forgiveness is not the silver bullet that everyone dreams of it is the worse irreversible costly plan out there and seems to me like a political Hail Mary for all its supporters.

    • Why do we want to keep people in their homes that they cannot afford? Let them default; and the banks will be forced to sell them at market rates to responsible homeowners. When prices fall; the middle class and the poor will be able to afford for home and improve their lot in life. Propping up home prices hurts the responsible middlers the most.

    • Whatever happened to personal responsibility for the actions you take and more importantly, that you make. For some reason the current Congress, and many of the more recent ones, have forgotten that the Constitution is very implicit in that the Federal Government has been charged with but two things, to provide for the common defense, IE, our military to protect us from outside aggressor’s and to secure the blessings of liberty, which include picking up the trash. That said, there is nothing, and I repeat, nothing that says “to forgive debt” for all those individuals who made poor choices. I’m reminded of a wonderful line from one of the Indiana Jones movies where they were seeking the Chalice that Christ drank from, and the old crusader who watched as one of the villains chose, picked and drank from the wrong cup, and the villain turned to dust, and the old crusader simply said, “He chose poorly”. Well, life is like that, and if you choose “poorly” you are the one who suffers the consequences. Don’t ask the other 300+ million Americans to “choose poorly”. Republicans or Democrats, we’ve all gone astray and until we have a Congress who truly represents the American people, we are going to have “poor choices” made for us.

    • Unless you don’t care if anyone takes you seriously.

    • What Mike S said.

    • Do not reduce principal on mtgs. The answer is we are in a mess. Let each home owner decide what to do if they can’t make payments, bky. or foreclosure. Just what we have been doing. It will clear up some day.

    • If anyone thought that the Subprime crisis was devastating, wait till the GSE’s have to start taking writedowns. Let think about this, if the GSEs take the writedown, all owners of those mortgages (ie, pension funds, corporations, HNW individuals and 401Ks) will be impacted. Now, knowing OBama, his team will arrange it so that the public take the complete writedown of your neighbors bad investment and save the union pension funds. This goosing of the economy will happen, it’s the only way for Obama to keep the economy going. It will be interesting to see how the rating agencies react. So, eveyone should go to your neighbor and tell them that because they made a bad investment, you are going to help them underwrite their loss for the next 30 years. Maybe they will shake your hand and say, “thank you.” BTW, the value of your own home will suffer under this proposal-the value of your neighbor’s home was just written down and so will yours’ based on the comps.

    • Mike S., why would I want people to keep making their payments. Well if they don’t you the tax payer will take the principal writedown guaranteed. All the mortgages are guaranteed byt Fannie and Freddie. If the borrower defaults the banks don’t take the writedown you as the tax payer does. Every homeowner that manages to keep making payments helps the losses stay flat. So you give up some return these loans are already on the books. If Fannie and Freddie take a loan back they need to fix it up carry it for a few months and sell it as you sadi correctly at the new lower value. That difference then goes onto the Fannie and Freddie line of borrowings. Therefore lower the rate or extending the payments is the best solution, then foreclosure and resale.

    • Here’s who everyone is forgetting: the stupid consumer who put 20% down on their home, didn’t “overbuy” a home gambling that it would be worth more in 10 years than it was then, and has been faithfully making their payments while losing 20% of their value. I’m not underwater because I could not be convinced by all those who really really tried (lender, broker, banker) to pocket the proceeds from the sale of one home and 100% finance this one. I HAVE lost tons of value, just not more than I still owe.

      So here’s the real moral to the story. There is no reward to taking care of your business, being fiscally conservative, buying and living within your means and paying your own bills. It has actually become kind of stupid.

      How about we just let people refinance their entire inflated mortgages at today’s rates and lots will stay, but it’s too hard to qualify for a refi if your LTV is bad, so they are stuck at 8,9,10, even 12% on those mortgages. Give ‘em a chance to stay & wait it out.

    • . . . . i cannot believe how uninformed, bigoted and for lack of a better word . . . . dumb people are . . . what exactly did Presidential candidate Newt Gingrich get paid $ 1. 7 million for from Fannie Mae ? . . . why did Fannie and Freddie spend $ 100′s of millions in lobbying fees as GSE , why were all these mortgages securitized and sold to Norway ? . . . . now wonder they refer to sheeple as consumers . . . . .

    • maybe Donovan can write a check or two out his own personal resources to help the banks as well as Phonie and Fraudie “forgive” a few loans. I doubt we’ll see that. More “do as I say, not as I do” from another
      worthless hack…

    • Nice to see sanctimonious trolls out in force, braying that *they* are current on their mtg. and bemoaning the ‘losses’ they fear they will have to help pay for. Total baloney. Half of Florida’s mortgaged homes are underwater, with home purchases that greatly enriched real estate types, county doc fees, contractors and most of all – local prop taxes. My boom purchase unjustly enriched pre-2002 buyers, who enjoyed an equity-gasm that they still retain a chunk of. I pay more than double the prop tax of many with similar or nicer homes, even after appeal. My 6.25% interest mtg. (on 73% – I put down 27%) enriches a bailed out bank. The feds shrug as BAC ignores my refi app, despite qualifying for it. Nope. I am tired of undue taxation and the whole loan mod scam. They can f.c. me – I maintain my lovely home and they can carry me out. I have paid plenty – more than most in the troll section.

    • Selfish “Florida D” said: “My boom purchase unjustly enriched pre-2002 buyers…”

      Oh, Jeez; you actually posted that?! Who put a gun to your head and forced you to make a “boom purchase”?!

      Seriously, on what planet is it so clear that it’s everyone else’s fault, and none of your own?! Your post puts forth some of the most deranged, unhinged thinking we’ve seen in years. It’s not sanctimony you’re seeing, it’s anger at how people like you could be so selfish, self-centered, and lay claim to complete innocence…

      P.S. You are not *entitled* to a refi !!!!!

    • @Florida defaulter, sure other people posting opinions different from your own must be trolls. If you are so smart, why did you purchase into the bubble? Why didn’t you consider the risks? Why do you think you are entitled to a bailout now? It seems you are entitled to special treatment, so who is “trolling” here? Bought a house? Please relax and enjoy it.

    • You state in your response “i cannot believe how uniformed, bigoted and for lack of a better word….dumb people are…” Newt Ginrich was paid by Freedie Mac, moron….

      3:49 pm February 17, 2012
      mistaken borrower wrote :

    • Principal write downs are not the answer. Over time the market will return and home prices will rise, not as fast as during the bubble, but in 15 years your home will still be a good investment. We need to keep government out everything. Everything the governement gets involved in turns into a nightmare and costs taxpayers a bundle. Let the market continue to correct on its own. Furhermore if you offer principal reductions to whom? Thank goodness for Mr. DeMarco holding firm and standoing by his convictions even with pressure from the President. It was another Democract Barney Franks that led the charge to reduce the standards at Fannie Mae and Freddie Mac to put people that couldn’t afford homes in homes and now you are going to reduce their principal balance and reward them again. GO Democrats. Entitlements are killing us, it really need sto stop now.

    • @ The Carl – loan mod language is in the original bailout, which was promoted to taxpayers, in part, on this basis. Neil Barofsky, the former bailout watchdog for years, has written about this extensively and cited it in congressional testimony.
      These mods, would have lowered mtg interest rates to prevailing rates. Would cost the taxpayers almost nothing, giving bailed-out banks a slight haircut.
      It’s hardly a bailout for homeowners. But we qualified for it, applied for it, and were slammed into default in free-for-all banks engaged in once they realized that their part of the bailout was voluntary. They hoped they could just steal a significant minority of the U.S. housing stock.
      Not so fast.
      I’m not selfish or ignorant, and your remarks are irrelevant blather. Millions of homeowners could be in their homes now, with families not uprooted and prop tax hauls intact, if the banks had given these modest rate adjustments that we are indeed – in writing – entitled to. I am working to prevent millions more from getting tossed into this fraud.
      Bing “Barofsky SIGTARP” and read all about it, on federal gov. web sites, in congressional testimony and reports to the GSEs and banks. It’s no secret, you are just unaware of the situation. Read up.
      Florida – pay no mind to these blithering trolls. No more checks. We have some traction here – the banks can’t handle seizing half the homes in the third largest state. Hold out for your loan mod, and don’t accept a temporary one. Those are head fakes, they f.c. when you run out of money. Meet them in court and ask for a mediation. There is no rush – they won’t open your file until your court date. It’s an 18-month wait on the docket in my county. Then, they give you the loan mod you were entitled to in the first place.
      Meanwhile, no more checks, Florida.

    • Alternate Reality, President Clinton signed the law that did away with Glass Stegal.

    • He sure did and he was wrong for doing it. But who sponsored through Congess and House the passage of the repeal? REPUBLICANS. You really discovered America there.

    • Thank you for time. Obama staff, all have suffered enough. With respect, to Fed Organizations, PLEASE USE HEARTS rather the dollars. Manic Depression aka Bipolar, always helped financially. NOW TET/QUADRAPLEGIC W T.BRAIN INJURY. Now part of Fed. & Native Denver HS. Live n LEARN.

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