tag:blogger.com,1999:blog-771892655051987797.post8563477396697202922..comments2023-07-26T05:01:10.813-07:00Comments on DC's Musings: Your Tax Dollars At WorkDennis C Smithhttp://www.blogger.com/profile/00914332467365539148noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-771892655051987797.post-45216584761142246572010-03-03T12:19:53.269-08:002010-03-03T12:19:53.269-08:00Wow...you seem really mad at Fannie Mae. But then...Wow...you seem really mad at Fannie Mae. But then you've been a critic for a while. I'm not close to thinking that Fannie and Freddie were blameless in all this, but I think you're giving them more than their share. <br /><br />Fannie and Freddie are part of an industry that can charitably be described as in disarray. Looking back, we can see a good many institutions that acted irresponsibly, and a number of people who seem to have placed greed before good business practice. I'm not so sure it was that clear back then, but hindsight is almost always so much better than foresight. <br /><br />I think the question we should address is what to do now, and I think there are some things the feds can do to help. <br /><br />They could enact a blanket exemption for loan forgiveness, to encourage borrowers to sell short. <br /><br />They could provide a refundable tax credit for reasonable relocation expenses. <br /><br />They could work with rating agencies to ease the penalties on people who default but otherwise pay their debts. <br /><br />Fannie and/or Freddie might consider offering mortgage workout packages that include shared appreciation, giving both borrowers and lenders an incentive to negotiate. <br /><br />Banks might consider widening sale/leaseback arrangements that allow borrowers to transfer ownership to their lenders and simultaneously lease the property. This would be of particular interest to homeowners who are "under water," and it would provide at least some income to lenders who aren't getting any now.<br /><br />The point of all of this is to make it easy to buy and sell property, and to assist in the resolution of defaulted loans. We can't "un-default" them, and it doesn't look like putting off the inevitable reckoning is going to help much. <br /><br />Or maybe we can just keep yelling at Fannie Mae.....Bob Schillingnoreply@blogger.com