New Treasury Plan May Lower Mortgage Rates

The Treasury Department is considering plans being pushed by trade groups to intervene directly into the mortgage market to dramatically force down rates and stimulate the moribund housing market, according to idustry sources familiar wih the matter.

One proposal calls for Treasury to buy the securities that finance home loans from Fannie Mae and Freddie Mac, the financing giants that back most mortgages in the United States, according to two industry sources who have spoken to Treasury officials.

Read the whole story here.

Comments

[instagladiator]

The silence of the lambs, or, as the public falls in line like lambs heading to the slaughter..

[UnknownSoldier]

Ok can someone talk me down on this one. Wasn't cheap money in the housing market the fuel for the bubble. i.e. loaning 50k at 10% is the same as loaning 100k at 5% This sounds like they want to start the same mess all over again.

[instagladiator]

It is and they do. You might want to research I.s.l.a.m.i.c monetary system to see how a true system works for the people. Right off the top of my head, Abe Lincoln and JFK attempted this but to no avail (surprise surprise).

[gras]

Yah Islamic banking is doing wonders for the financial/real estate crisis in Dubai. You don't need Sharia law (and tons of petro dollars proping it up) to run a sound financial system, you just need conservative banking principles. Want to see it in action? Look no further than Canada.

[coquine]

Neither Mr Bernake, nor Mr Paulson and Congress/Senate talk about cutting property taxes. This is a Major problem. Cities/counties still have high assess values and milleage, homeowners cannot afford their mortgages and property taxes. WHY NOBODY Talks about it? Are politician afraid to live on a budget like us??????????????

[sudeki]

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[emailers2]

OT: This is very important and should address it.

Geithner May Seek to Push Bair Out After Clashes During Crisis

http://www.bloomberg.com/apps/ne....Qbg& refer=home

I think that Bair has done the best job in the admin. Her ideas on the are better then his and she should not be pushed out.

It is very import for the FDIC to be independent and to protect itself. Solvency is the key to continued performance of the FDIC function. Bair's job is not to cave to treasury but to protect the FDIC.

If this is an example of Geithner 's leadership, it is leadership that is destructive and unwanted. Punishing others in the administration is something of the Bush regime that is counter productive.

We need all of the ides we can get to assist the economy and main street. Our crises will not be solved by saving the financial industry in NY and ignoring the rest of the economy.

I am appalled by this article. Is this change we c an believe it?

[paixa3]

I think that this should have been MOVE ONE. Re-write ALL mortgages as fixed terms, 15, 20 or 30 years and MANDATE no fees and the interest rate of 2 points above prime.

PERIOD. ABSOLUTELY ZERO EXCEPTIONS FOR ANYONE ( EVEN CONGRESS).....

The few who would still lose their homes were the folks who sadly, probably should not have purchased a home.

[Peter007]

I'm in the mortgage business. That idea would reduce availability of mortgage money and cause housing prices to fall another 30%. You may feel better but he guy that's already lost 30% of his home value may want some input. Most of them are already pissed off.

[UnknownSoldier]

Yeah, right ok buddy.

[instagladiator]

Dream on.....

[Truth4Voters]

I wish the lower interest rates were an option for all homeowners. A two point reduction would save us about $250 a month. Imagine if every household had surplus income in that amount. It would be an extraordinary boost for the economy.

[Georgiadude]

Everyone should have the option to refinance to a lower rate, it would not cost the government any money to do so.

The big losers would be the investors that are holding the paper on home loans across America.

[RButler]

I read more intelligent comments here about this subject than the pundits, commentators, CEOs and politicians who can only speak in analogies:' Wall Street vs. Main Street,' 'a bridge to somewhere instead of a bridge to nowhere' and stuff like that. We all can tell the difference between specific, powerful language that will result in effective action and BS that goes nowhere, but explains and excuses past performance.

When JFK said we were could to put a man on the moon and return him safely to earth, you knew if was going to happen even though we didn't know how at the time. I haven't heard anything that decisive yet from anyone about our current situation. Same thing with Babe Ruth pointing to where he was going to hit a home run. All the wishing and hoping ain't going to get us there if we don't know where there is.

[instagladiator]

"All the wishing and hoping ain't going to get us there if we don't know where there is."

The "there" merely meanders via a vicious circle which will simply end back at the same place, only with more debt (interest) attached to it. Simple as that.

Under your current monetary system, how in the world can you ever pay off the nation's debt? You cannot, it is impossible. Research it. The last time this was actually attempted (nearly accomplished) was during Abe Lincoln's term in office.

[UnknownSoldier]

Having a little debt is healthy for the economy I will not explain because it would take too long. Having massive Reagan/ Bush type debt is irresponsible.

[SoD1]

Sir, I so agree! Reading a number of suggestions and ideas alone here on this threat alone, I am already CONVINCE a number of Bloggers here would do BY FAR r more better than the incompetent, self-serving ones in charge now of "fixing" our Economy.
Those "deciders" appears, at last to me, more and more like brainless headless hens or greedily "glutton" taking the last bite out of the World, befroe over-eating himself to death, as well..

Best Regards!

[Dawg100]

We do not have a credit crisis; we have a repayment crisis. The US Government gave hefty tax incentives to large corporations to send high-paying manufacturing jobs to foreign countries, thereby yanking the legs out from under the working class, on whose backs the entire financial Ponzi scheme of the US economy rests.

So now the FED's only "solution" to the crisis is to try to get the workers to borrow even more?

[Peter007]

There is a credit crisis. The value of most everything we have is based upon confidence that the sun will come up tomorrow. Housing prices are based on the fact that you will be able to pay the lender your mortgage payment because he assumes you will have a job. Remove the confidence factor and everything disappears. The free trade , out sourcing, tax incentives topic is a separate conversation. If your employee doesn't think he can sell that ---------fill in the blank----tomorrow you are out of a job. Confidence needs to be restored..

[instagladiator]

The FED "IS" the problem.

[Peter007]

Reduction of mortgage rates would be the best thing the Fed. can do to stop this financial crisis. The deflation of the housing market was the "hole in the boat" that is causing the ship to sink. Patch up that hole and other problems will take care of themselves. The low interest rates will will cause a domino effect for the rest of the economy. Stabilized housing prices will do 10 times more than an economic stimulus package. Its a no brainer.

[SCG]

With job loss rapidly accelerating, who would take on a major debt now? I hope this program hangs around, because I think it's too late now, and won't be of use until further down the road. Also these funds should be aimed at those who need the assistance, and not become another subsidy for the wealthy, or speculators to consolidate more housing stock.

Perhaps for a primary residence, and a middle class average home price?

[RButler]

Re: the Big 3 automakers. People complain about the CEO compensation and the UAW costs and benefits to workers but no one complains about the millions paid to Tiger Woods by Buick the past 9 years. Why? Nothing against Mr. Woods but the public is of 2 minds about these things. I would love to see Hollywood, professional sports and the recording industry and other similar industries see there compensations and benefits shrink in this economy.

If it takes $100 million to make a movie to entertain you for 2 hours in this economy you're part of the problem. If you have no savings, a high balance on your credit card, are upside down in your mortgage, have no health insurance and so on and you're plunking down cash to fund the entertainment industry every week, you are part of the problem. The priorities in this country have been upside down for decades. I live in Los Angeles County where hospitals have been closing one after another but the entertainment industry seems to suck the funds of of our society just fine.

[TheGuide]

I'm a real estate agent. Make it happen.

[BPCentrisAmerican]

That would be great, if the banks, who have been bribed with tax payer bailout money actually loaned money to normal people and businesses. I recently heard of a bank using bail out funds to set up a business in China, nice. This is despicable. Treasury only hired 50 people to oversee this bailout process, where when 200 were needed, than again who wants to work for these out going losers. Good old corporate patriotism, got to love it.

[datone]

Perhaps along with everyone else who is giving up something, realtors could give up the fixed 6% commission and reduce it to 3 or 4%.

[CheshireCat2]

Most are willing to do that along with the shirt off their back and the PB&J sandwich they brought for lunch.

[Misha-in-Texas]

3% of nothing is still nothing. They've pretty much given up their livelihoods already.

[Peter007]

You can get the commission reduced to 0%. Sell it yourself. !!!
People do it all the time.
Although somebody once told me that " you get what you pay for".
Its up to you, its free choice.

[Peter007]

The commission is usually split 4 ways so the actual agent gets only 1.5%. On a 400,000 house thats $6,000. In my town there are about 200 agents and about 100 homes sold a year. If an agent does 6 transactions a year, they are just making a living.

[inthenitemare]

I don't know about the 4 way thing, but I do know that it is now common to split the 6% 2 ways, which gives the buyers agent and the sellers agent each 3%.

[Midnightrain]

I'm with Robert Reich on this issue: It's time to invest in human capital and stop throwing good money after bad.

[BPCentrisAmerican]

You got that right.

[Peter007]

A reduction in mortgage rates will have 10 times the effect of an economic stimulus package. The economic stimulus package doesn't create any new wealth. It just redistributes existing wealth. Tell me what wealth is created by repairing a 30 million dollar bridge. 50 workers and 3 construction companies get that money. But it comes from other peoples pocketbook. Where is the wealth created?