.....PLEASE READ THIS POST <--- LINK

Imagining this is the long hand of O's administration, philosophically speaking...

The 'carrots' are gone for 720+ over 85% LTV. And the 'stick' is bigger for people who either 'live beyond their means', cant pay on time, etc...

And only a 25bp carrot for 'responsible borrowers' who are what... downsizing??  How stimulative is that?

NOT STIMULATIVE.

And if you are  a responsible borrower who built equity and want to cash some out to... O I don't know BUY AT THE BOTTOM, or remodel while labor and materials are are just ASKing for a BID, you get hit with the stick?

NOT STIMULATIVE.

I can understand using a bigger stick on risky borrowers as a way of behavour modification, and exclusion.  But why not move those 25bp carrots to below 85 LTV and get some STIMULATION in the hands of responsible people interested in bidding on all this supply?

If this is just a way of generating income now would not be the time, it will never be enough to no longer need a backstop, nor will the revenue restore confidence.

Am I a NOOB who is missing something?  Or maybe it's a goverment conspiracy to further depress equities creating more flight to TSY to lower Uncle Sams mortgage?

I can say it doesn't support this... Enabling Up to 4 to 5 Million Responsible Homeowners to Refinance

And is counterproductive to this:

This initiative is focused on adding disposable income to a very specific group of consumers...those who have proven their ability to remain responsible borrowers during the downturn...

hmm.... 

Coming soon....

115% max ltv fannie mae streamline rate and term only refi with appraisal waiver through DU.

That will get those UIC movers to change direction and get "that which shall not be named" off and running.

You heard it here first. 

FHA is looking better everyday...

LLPA's are offsetting the majority of the actions taken by the fed/trsry enable responsible refinancing.  I would estimate that the average credit score of my typical borrower is 690.  And the average ltv is probably 80% and the average loan amount is 165k.  So, on average my typical customer is paying $2475 in fees to simply refi to a lower rate.  It seems like there would be a way to make the most severe LLPA's applicable only to borrowers that have recent derogs or delenquincies/late payments (like a mortgage late in the last year or maybe two 30 day lates on a consumer account in the last year). It just seems like I see plenty of borrowers with a perfect credit history that for whatever reason, have scores in the 680-720 range that this not good enough right now.

In my area I do lots of construction loans for young people building their own home and I can't tell you the number of times that I have had to tell a young, somewhat credit light borrower that they will only qualify for the lowest rate by paying 2,3,4,5K in discount points.  It is truly and utterly unfair.

As far as I am concerned this is a money grab and Fannie and Freddie are trying to recoup their loss from last year.  The fees that are being charged are excessive and overpriced.  They can not convince me that a 720 credit score borrower  today is a bigger risk this year vs. last year.  The average credit score is in the 680's and that borrower now has to pay extensive fees to improve the interest rate, completely unfair.   

In several states that have low average credit scores do not have high foreclosure rates.  This is in direct conflict with the GSE's argument that this is to offset the risk of lower credit scores.  As more and more homeowners or home buyers become disgruntled due to these fees they will speak up, let their legislators know and we can try to get this changed.  Senator's Landrieu and Vitter from Louisiana are currently working on a Bill in the Senate to address this issue.  Please give them your support.

Ross L. Miller

Dear Mr. Obama,  The left hand of your government is not talking to the right hand.  The FHFA has taken conservatorship of FNM and FRE, essentially controlling what they do.  And this is what they've done!  They have stifled FNM/FRE loan production with these outrageous LLPA's.  That has driven more loan production to FHA - which by the way, is also a government backed loan program.  You cannot point your finger at banks and say, "Thou shalt start lending", because the banks and us brokers, we are trying sir, but nobody wants to pay 5 points for a cash-out refi to 80% of their homes value -- oh wait a sec, I think that is a "high-cost" loan, and is against (guess what) GOVERNMENT regulation.  So, you see we are stuck.  And it is not because of "de-regulation", I would posit that "over-regulation" has us in this mess to begin with.  The LLPA's are another perfect example of "over-regulation" stifling business production.

So MY solution?

Flip this grid on it's head and put a few more "negative" numbers up there.  Increase the Low LTV High FICO borrowers to -3.00 and see what happens.  Let the higher LTV lower fico score people pay the extra +.25% and allow the banks and brokers to start making a few more loans.  Oh, and by the way, all of these loans we'll be doing, they will all be to people with acceptable credit histories, and full documentation of income.

So should we give another bailout to banks and say, "hey, why aren't you lending this money", or should we just go ahead and fix the problem?  Do we need ANOTHER new program to stimulate housing and allow people to refinance that rewards late payors and does nothing for people with good credit?

If we could just get Obama, Geithner, and Lockhart together in the same room, perhaps they could figure this out.......then again.......

It's time for the government to step in and take control of what they already own, namely Fannie/Freddie.  Is it that difficult for the to see that the LLPAs are killing all of the hard work they are doing to lower rates?  

And just on a side note, two posters pointed to the new administrations involvement in these fees.....keep in mind that they were announced on Dec. 29, long before the administration took office. 

Justin Bayle:

And just on a side note, two posters pointed to the new administrations involvement in these fees.....keep in mind that they were announced on Dec. 29, long before the administration took office. 

Just to be clear, I AM a SUV-driving, red-meat-eating, lower-my-taxes Republican.  And Proud of it.  Obama clearly benefits from being able to look back several months and say, "Wow, THAT didn't work!"  (bank bailout ver 1.0)  But I did take issue with him shouting and pointing his fingers at bankers (even though I am not one, I'm a broker), mainly because I agree with your next point:

Justin Bayle:

It's time for the government to step in and take control of what they already own, namely Fannie/Freddie.  Is it that difficult for the to see that the LLPAs are killing all of the hard work they are doing to lower rates?  

yes, I 1 Trillion percent agree with you on that sentiment Mr. Bayle.  Emphasis on the trillion.

I think this is a big roadblock....MBS current coupon might need to push down to 3.5 with these adjustments.