Fannie and Freddie own close to a half million /million (choose one) foreclosed homes. These are now owned indirectly by the Fed and even more indirectly by you and me. Let’s say each one has a note for 200K on it. The cash was paid out, the money was spent and the bank was hung out to dry.
In a regular real estate deal, the buyer goes to a bank and negotiates a loan. Right now the banks are a tad short of cash. They are trying to convert non paying IOU’s into performing home loans. In order to borrow real money from a bank, persons need to prove that they really don’t need it (having a last name like Rockefeller or Buffett also helps). To top it off the banks are asking for something unheard of, a down payment and proof of financial responsibility!
Why not look at foreclosures? Hmmm. Uncle Sam will loan the full purchase price plus all fees and maybe some money up front for “repairs. “ ----Just multiply the wannabe’s gross salary times five. This determines the bottom line bid amount with 100% financing.
This new program is what I call the “Hamburger Flipper Dream Home Loan Program.” This is a recast of the old “Fog a Mirror Home Loan Program.” The government will sell you a 200K home for 100K. They (you and me) eat 100K but the real estate loan is back on line being serviced by a new owner.
From a homeowner standpoint, if you can sell your present home for more than you paid for it, the gain is yours, if not the loss belongs to the government (you and me). Our government has guaranteed that there will be no losses on the sale of home loans by the banks. Such generosity!
Maybe next year, the government will throw in a free car (GM, Ford or Chrysler--your choice) and a chicken with every home loan. It kind of brings you back to that old Hoover election ditty saying “a chicken in every pot and a car in every garage,”—prosperity’s right around the corner.
It might be a good time to buy a home (I’m lying). If prices drop, the buyer can always walk away from it. The neat thing with this arrangement, the government indirectly guarantees the down side. If they print too much money, the house will be very easy to pay off with worthless dollars. One thing to consider here, is the fact that a home is a sitting duck as far as government taxation goes. Any property tax obligations would keep up with inflation.
This government housing program is a little like a hooker run funeral home. They’ll get you coming and going.
Copyright 2008 All rights reserved
15 comments:
Yes, clearly it cannot work. But anyway, Merry Christmas!
Jim,
Merry Christmas to you and your family. Keep up the great work with the blog.
With the new "bleeding heart" President and Congress about to grace us in January I expect full assimilation of the lemming population at the end of 4 years.
The government will soon be in control of everything and all under the guise of saving us from economic destruction. Our new President will ring in the new age of an American Socialist Order. Politicians love power and the sure way to achieve it is through fear. Hope only gets them elected.
Your on to something about giving a new GMFC with every new foreclosure purchase... but this will only be the beginning. Soon after the government realizes there are still no takers, they will offer it all for free under the agreement that you take an Obama sponsored Jay-Oh-Bee. This will work out beautifully for our friends just south of the border.
Tom
Hi Sack
Thanks for dropping by, I hope Kriss Kringle was good to you. Have a Happy New Year.
Hi Tom
Hope you had a Merry Christmas.
Here is wishing for the best for all of us in the coming year.
It kind of looks like we are all going to Disneyland this year, the Hand Basket to Hell ride must be broken. Congress might be able to fix it, you never know.
Take care
let's seen, my kid's 22 months now and that's 9 months + 2 weeks of "gestation".... so 31+ months, i've bee following your blog!!!
thanks for a great blog!
:)
Oh no! We gonna have a "bleeding heart" president that will destroy our economy!
Boy I sure wish we could keep the current occupant of the white house. Yep. Ol' Georgie boy would never cave in to pissing all our hard earned money away.
Wake up: It does not matter who "won" the job. The republicans have just shown us what spend thrifts they realy are. There is no fiscal responsibility in Washington. None.
Party loyalty is for suckers and fools.
Hi Anon 9:05
You have a rather unique way of tracking time.
I guess that makes you a charter member, I started this blog in May of 2006.
Glad you like it. Have a Happy New Year
Hi Anon 10:48
I totally agree with you. I've got something I am still working on for later next week on how the government can't really do much with the present economic situation. Our government never saved for that rainy day.
Here's wishing you the best for the New Year
Hi Anon 10:48,
What nice assumptions you make...
I NEVER said that your (yours only because I don't claim them and assume you do) "bleeding heart" President and Congress will destroy the economy, nor did I say I wanted the current idiot in the oval office to stick around. My point was that we are about to see the new government spend unconscionably large amounts of money that are not in reserves or collected through tax receipts. What effect that will have on the dollar... well, you decide.
I use the term bleeding hearts since this is the heart and soul of the Democratic party. If I'm wrong about that, please give one example that contradicts the policies and philosophy of the Donkey lovers.
The current fiscal policy of ALL members of the government is in disarray which many feel helpless that nothing can be done to change it. A capitalist society does not call for socialist behavior on the part of our representatives in a time of economic downturn. Why is our government continuing to reward those who have ef'ed our economy up? Just follow the money.
Are you prepared to cut your salary in half, double your local, state and federal tax rates and receive your check directly from the government? I firmly believe this is where our country is headed. We will become just another extension of Europe.
Tom
Hey Tom,
Oh I is a "donkey lover"? Wow!
I can not stand the TARP. I asked my congress critter and Senator to just say no. My senator is Kyle. Guess how he voted. He voted to dole out $700 billion to a bunch of crooks. The republicans caved in. Typical.
The repulicans managed to greatly increase the size of government. They managed to create a HUGE new intitlement program (medicaid part D). These republicans went on a scare campaign to be able to data mine all electronic communications. Who are these guys? What happened to the republican party?
The parties only differ on how they want to spend all the money we do not have.
Have a nice day you republican robot. Make sure you listen to Rush and watch only FOX news. Idiot.
Hi Tom
I kind of wonder why Bush is down on your list. He got elected by half of the voters for two terms.
When you realize that the President is the top Cop for enforcing legislation not making it, it brings the office into a different light.
You want to blame someone for this mess, try Congress.
All the president can do is hop on if he likes the bill. He got elected on half the vote so any legislation that passes by 50 percent and gets his vote is really no big deal.
I believe that the foreign policy call in Iraq was within bounds but not universally accepted. On that premise, it was assumed flawed by those that didn't vote for him.
I am a firm believer that you project power on others or you have power projected upon you. If you don't feel up to it someone else will. I don't think that you can call Bush a whimp. He kicked some ass and hung a tyrant.
Thank you for your comments
Hi Anon 10:42
You posted while I was answering Tom.
We need to look at one thing. Neither political party is producing results, they are just faulting the other party.
I do disagree that the Republican party is trying to make government bigger, if they had their way, government would be nonexistent.
As for entitlement programs,the Republicans don't really want them, you have to be a card carrying Democrat.
It's about time for that third party. It's kind of scary, this is how Adolf Hitler got elected to office. People got fed up and frustrated with the bull Sh*t in democracy. Who says it can" happen again?
Hi Anon 10:48,
If only we could speed up time or see into the future. Since we only have the past to look at, we will just have to wait and see what happens to us all next.
I'm sure one thing we can both agree on is that no one in our government can be trusted or relied upon when it comes to spending taxpayer's dollars.
I also wrote my representatives and begged them not to support any form of bailout. I now hear that financial institutions receiving billions in TARP cash cannot account for any of it.
Just lovely...
Tom
Jim,
I use the word idiot to describe Bush since the shoes thrown at him recently not only fit but were actually his own.
Yes, the US has showed its military strength over the last eight years, but at what cost? The Iraq war (arguably completely unnecessary) has already cost over $600b dollars... and these are just the monetary losses.
Many folks, financial institutions and the government are on my list for getting the blame. But inside the government, in my opinion most if not all of the blame for past and present financial ruins can be traced to 5 people... Greenspan, Pelosi, Reid, Frank and Paulson.
Tom
Hi Tom
I wrote both my Congressmen also. Brian Bilbray voted against it. So one listened.
I don't think that anyone political can really take the blame for this mess. They could be guilty of trying to fix what we did to ourselves, but they didn't cause this mess. The stock market bubble, the real estate bubble and the credit bubble were created by pure greed and the need to have it all right now.
Likewise, I don't think that there is any political solution. All our government does is pay the bills. I agree with you, that they do know how to spend.
Have a Happy New Year.
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