What have we done?? Freddie Mac reports 2Q loss, asks for $1.5B in aid

They need to quit hiding behind Fannie and Freddie and just nationalize the entire mortgage industry. The banks screwed it up royally and they should be lucky to even get a role in servicing of the nationalized primary mortgage program. Commerical and investment properties would not be a part of it.

This is how it would work. Goverment buys every primary residence mortgage in America at 100% of the principal. This includes everything the banks and securizations own. Investors should be happy as they got full money back on crappy mortgages. They probably won't be though as they still stand to gain more on interest and they need the loans to suppport their leverage. I say too bad. Let those who fail because loans are repaid go ahead and fail.

Once the government owns the loans, they need to automatically offer all homeowners new 30 year mortgages. They also need to reduce principal down to market value or 30% whichever is lower. For those who want shorter terms you get a smaller discount. The cost of the program is nil as the government would get paid back $1.35 for every $1 of original principal. There would be no prepayment option. This should be sufficient to run the program and provide a bit of profit to the treasury. It would also go a long ways to revamping the economy.

For those that still can't afford their mortgages or have simply abandoned them, yes you lose your house and quickly. If you lose your house after the refinance, then a condition of resale is the assumption of the new loan.

The Fed could run such a program without requiring us to go further into debt.

I say we give it to them and cut Social Security for the elderly.

Should trickle down eventually anyway.

It's been working great so far.