Special Report: Well-to-do get mortgage help from Uncle Sam

Special Report: Well-to-do get mortgage help from Uncle Sam

www.reuters.com

Before the financial crisis, the limit on loans guaranteed by Fannie Mae and Freddie Mac was $417,000. But in 2008, when widespread mortgage defaults pushed Wall Street to the edge of collapse, Congress changed the rules so that the companies could back mortgages of up to $729,750 in high-priced areas like Santa Clara.

For the government to back mortgages for big, expensive houses may seem "kind of obnoxious," said Richard Green, a housing economist at the University of Southern California

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I really am dismayed that the Fed may be exercising too much power over the economy with more bad policies helping the rich get richer. These new policies are not helping the poor Homers and Marges of the US they are helping Mr. Burns get richer.
If these big banks are too big to fail they need to be broken up into more manageable sizes that can fail. When any corporation or bank is TOO BIG for the government to let fail it poses not only a monetary risk to our economy but also an infrastructure risk to our country.


www.reuters.com
(visit the link for the full news article)

Can I ask if you live in California?

It's a mixed blessing in that government intervention in the housing market has kept real estate prices from crashing which is the biggest investment for most middle class people. For my wife and I it's our retirement plan to a large degree.
Some places have sky-high real estate prices anyways and you can't buy a decent home for less than half a million dollars. Problem is the market never should have skyrocketed the way it did in the first place but that's water under the bridge now.
Government still needs to guarantee loans so people don't loose their houses and values won't plummet. But once the crisis is over they need to start scaling down their loan guarantees.

It's chafes everyone's butt when Fanny and Freddie are helping people buy vacation homes or living beyond the means but it's near impossible to monitor those kinds of things in a massive Federal program.

Eta - somebody making 300K a year certainly doesn't need help from Uncle Sam.

"Too Big to Fail" is just a stage of business growth which precedes "monopoly." In America, ;monopoly' usually means a business with so many networked connections that its failure cripples a host of associated businesses. Since monopolies exist, they will use their governmental influence to ensure that any potential competitors in the volume of revenue they manage get ... "sick and die."

The quasi-governmental cancers our political duopoly has inflicted on our nation are the single largest source of corruption and 'confidence-game' type rackets ... (by the way, those always happen to be either "too big to fail" or have a legislated monopoly status (though they prefer the term "quasi-governmental) ... like the Fed, the IRS, Fannie and Freddie, the BAR, the Post Office, etc.

This final leveling-up of the loan amount cap was a sign that they were bilking the economy of its wealth before the bubble they created burst.... a lesson they learned from the e-bubble of decades gone by.

It didn't matter who the clients or consumers of the loans were... only that they could participate in originating them... because that is where the instantaneous profit (money for nothing) is highest.

Originally posted by Maxmars
"Too Big to Fail" is just a stage of business growth which precedes "monopoly." In America, ;monopoly' usually means a business with so many networked connections that its failure cripples a host of associated businesses. Since monopolies exist, they will use their governmental influence to ensure that any potential competitors in the volume of revenue they manage get ... "sick and die."

The quasi-governmental cancers our political duopoly has inflicted on our nation are the single largest source of corruption and 'confidence-game' type rackets ... (by the way, those always happen to be either "too big to fail" or have a legislated monopoly status (though they prefer the term "quasi-governmental) ... like the Fed, the IRS, Fannie and Freddie, the BAR, the Post Office, etc.

This final leveling-up of the loan amount cap was a sign that they were bilking the economy of its wealth before the bubble they created burst.... a lesson they learned from the e-bubble of decades gone by.

It didn't matter who the clients or consumers of the loans were... only that they could participate in originating them... because that is where the instantaneous profit (money for nothing) is highest.

I couldn't agree more

the primary reason for the increase in protection was that they were aiding the continual purchase of higher priced homes. during the real estate bubble, homes were way over valued but, given the inherent stupidity of people, nobody worried about the ride down that hill and, with increased home prices, the average mortgage size was increasing. In an effort to keep those home purchases moving, they increase the protection amount.

The classification of a jumbo mortgage has increased over the last 20 years as well.

it's all part and parcel in dealing with rising prices and changes in the environment.