Economic Stimulus Bill Passes
OFHEO Director Highlights Economic Stimulus Bill Risks...
James Lockhart III, OFHEO's director (oversees FHA, FNMA, FHLMC):
"The conforming loan limit provision in the stimulus package would increase the Enterprises risks by allowing them to enter the 'jumbo' loan market."
Lockhart says his concern is based on the fact that underwriting jumbo loans--most of them based in California
--will require new models and standard modes of operation to ensure safety.
"Capital also would present challenges even if all newly conforming mortgages are securitized.
A $600,000 loan requires as much capital as three $200,000 loans."
Expect a resurgence in: Firms that rent assets to people to help them fraudulently qualify for a mortgage...
like loaning them money to keep in their bank account for a couple months so they can fool the lender with documented savings that evaporate the day after the mortgage is signed.
And firms that front as an employer...
the borrower pays an "employer" to pay him a lot of money in a fake job for a month or two so he can show a fat paycheck in his loan docs.
Why? It appears that Congress is about to pass...
The Biggest Fraud in American History...
Why should taxes from families earning $48,000 a year be used to support expensive mortgages in New York, Los Angeles and San Francisco?
Welfare for the hungry and homeless is evil, but welfare for million-dollar homeowners facing a tough refi ... well, that's called "helping the economy."
Congress is about to sell us the biggest fraud in American history. It's been highly touted as
an economic stimulus bill that will help millions of Americans. But, as the old adage goes, nothing comes for free.
Now, thanks to Congress, junk bond investors will be able to pawn off their bad debt to Fannie and Freddie.
This shift will certainly doom Fannie Mae and Freddie Mac, so don't be surprised if we, the taxpayers,
have to bail out poor Fannie and Freddie - to the tune of more than $1 trillion.
If Goldman Sachs is correct in its recent projections that home prices in California are going to drop 35 to 40 percent,
the state's losses alone would top $2 trillion, because California has a disproportionate number of jumbo loans.
In the coming months, Fannie and Freddie will buy up mortgages based on old, fraudulent appraisals
and on loans with bogus inflated incomes. Unfortunately, many of these loans will still default.
Teary-eyed lawmakers can take to the airwaves a year from now and declare: "We had no idea Fannie could go under, but we can't cut and run now.
We have to bail out Fannie and Freddie for the good of America! It's going to be a tough slog, but you're getting used to those, no?"
Those same lawmakers won't mention the fact that they get paid far more by real estate lobbyists than they do from our Treasury.
James Lockhart III, OFHEO's director (oversees FHA, FNMA, FHLMC):
"The conforming loan limit provision in the stimulus package would increase the Enterprises risks by allowing them to enter the 'jumbo' loan market."
Lockhart says his concern is based on the fact that underwriting jumbo loans--most of them based in California
--will require new models and standard modes of operation to ensure safety.
"Capital also would present challenges even if all newly conforming mortgages are securitized.
A $600,000 loan requires as much capital as three $200,000 loans."
Expect a resurgence in: Firms that rent assets to people to help them fraudulently qualify for a mortgage...
like loaning them money to keep in their bank account for a couple months so they can fool the lender with documented savings that evaporate the day after the mortgage is signed.
And firms that front as an employer...
the borrower pays an "employer" to pay him a lot of money in a fake job for a month or two so he can show a fat paycheck in his loan docs.
Why? It appears that Congress is about to pass...
The Biggest Fraud in American History...
Why should taxes from families earning $48,000 a year be used to support expensive mortgages in New York, Los Angeles and San Francisco?
Welfare for the hungry and homeless is evil, but welfare for million-dollar homeowners facing a tough refi ... well, that's called "helping the economy."
Congress is about to sell us the biggest fraud in American history. It's been highly touted as
an economic stimulus bill that will help millions of Americans. But, as the old adage goes, nothing comes for free.
Now, thanks to Congress, junk bond investors will be able to pawn off their bad debt to Fannie and Freddie.
This shift will certainly doom Fannie Mae and Freddie Mac, so don't be surprised if we, the taxpayers,
have to bail out poor Fannie and Freddie - to the tune of more than $1 trillion.
If Goldman Sachs is correct in its recent projections that home prices in California are going to drop 35 to 40 percent,
the state's losses alone would top $2 trillion, because California has a disproportionate number of jumbo loans.
In the coming months, Fannie and Freddie will buy up mortgages based on old, fraudulent appraisals
and on loans with bogus inflated incomes. Unfortunately, many of these loans will still default.
Teary-eyed lawmakers can take to the airwaves a year from now and declare: "We had no idea Fannie could go under, but we can't cut and run now.
We have to bail out Fannie and Freddie for the good of America! It's going to be a tough slog, but you're getting used to those, no?"
Those same lawmakers won't mention the fact that they get paid far more by real estate lobbyists than they do from our Treasury.
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