Don't Worry, the Government Will Pay Your Rent or Mortgage

Wow. In my 2009 Outlier Predictions [Dec 16, 2008: 13 Outlier 2009 Predictions], I wrote:

But larger than that - my prediction is Fannie/Freddie and then above and beyond that, for people who do not have 20% down and won't pay for insurance, the FHA - will wage a war against current mortgages. We'll see interest rate buydowns, we'll see principal reductions, we'll see anything and everything that basically gives a big (bleep) you to people who have been honoring the system. In return we will tell those people, well if your neighbor's house goes into foreclosure we will all suffer, so it's a necessary evil.

Obama & Co will also come up with myriad plans for buyers to suck up excess inventory - the government will be our partner. Nothing should surprise you - this will be an all out assault - we are already seeing the first inane ideas such as no appraisal refinances

But this! This is just amazing - even my wild imagination did not think we'd get to the point of the government making housing payments for the unemployed.

Further, the United States government now wants to become the largest landlord on Earth.

• U.S. government officials are weighing a plan that would let borrowers who have fallen behind on their mortgage payments avoid eviction by renting their homes instead, sources familiar with the administration's thinking said on Tuesday. Under one idea being discussed, delinquent homeowners would surrender ownership of their homes but would continue to live in the property for several years, the sources told Reuters.
• Officials are also considering whether the government should make mortgage payments on behalf of borrowers who cannot keep up with their home loans, tapping an unused portion of a $50 billion housing aid kitty. As part of this plan, jobless borrowers might receive a housing stipend along with regular unemployment benefits, the sources said.

Wow. Just wow.

They are obviously floating this to gauge public perception. Boy oh boy, I can only imagine what many in this country will be thinking as their money was first used to subsidize people who had no savings to turn from renters to buyers, and now will subsidize them to become renters again - but inside the home they should have never been in. So they cannot make a mortgage payment, but they can make a rental payment. That would make zero sense; unless the rental payment would be lower. Which means someone takes the hit (read: taxpayer).

Plus the concept of the government making mortgage payments for people - just not something even crossing the conceptual precept of my mind.

Why bother to work anymore... everything is handed to you. Thankfully, we can get away with this because the U.S. has more money trees growing in its fertile land than all other nations combined; money oozes from the pores of the branches nationwide. Bailout Nation now a national ethos, from corporate to individual. "I deserve mine" bumper stickers everywhere.

Wow.

Comments

[doubleguns:]

This great giveaway could be just a great cover-up.

Bankrupting America is beginning to look like an Obama plan. Is he some kind of evil shill sent here to destroy America? I have been concerned but now I am getting frightened. We are so far over the top it is hysterical.

All warning lights are flashing, alarms going off, gages pegged full scale and evacuation procedures are most probably being prepared by the elite, wealthy, connected and politicals.

Every time a country fails the elite, wealthy, connected and politicals make off with the country's money at the last minute. Are the elite, wealthy, connected and politicals getting ready to fleece the sheeple. How much closer are we to the end game now?!!!

Our banks have almost been completely taken over (see wall st. breakfast today) which they need the right people in place to get the money out if we get to the end game. The FED, GS and JPM were always in the pocket.

Japanese (suspected banking officials) sneaking 134.5 bil in US bonds into Switzerland.

The great giveaway could be the great cover up. Where did the 1 trillion dollars go that the fed cant find where it was spent? Possible bank holiday in the works. Embassies hoarding 1 yr supply of local currencies.

Is anyone else out there putting this together or am I just some wack job with every one thinking I need to replace the tin foil hat for a copper colander.

I am very concerned here.

Jul 16 10:17 AM

[conceptwizard:]

Make that two wack jobs.

1. Breaking Bankruptcy laws.
2. Breaking contracts to bondholders.
3. Taxpayers owning bankrupted car companies.
4, Giving the FED a private entity unlimited powers.
5. Giving trillions to banks, mostly unaccounted for.
6. Putting Larry Summers the "Glass-Steagall Kid" in charge.
7. Increasing spending to the military in the time of economic need.
8. 3 times the budget deficit in less than 12 months.
9. Re-Fi's on foreclosures, to people who should not be in homes to start with.
10. Manipulation of stock markets through liquidity injections from the FED to GS and JPM high speed trading computers.
11. Countries running scared on the dollar devaluation, China in particular.
12. Monetization of debt in the trillions. Printing money to buy our own debt.

This stopped sounding like a democracy at point 5. We are becoming a socialist country. This is not what our founding fathers had in mind for America. The lives that have been lost fighting for the greatness of America has been tarnished by the greed of Wall Street at the consent of Policticians. The country is being decimated from within.

Jul 16 10:50 AM

[basehitz:]

I echo doubleguns. Last year and into the summer, as I watched Bazooka Ben and others making increasingly outrageous moves, I kept asking "What are they so afraid of?" Last fall we found out.

Now, when they seem to be willing to say or do anything to prop up asset values, I repeat the question. I suspect they are afraid rising unemployment will continue to drive foreclosures higher and home values lower, perhaps again threatening banks given the phony stress tests. This morning we got further bad news on foreclosures.
finance.yahoo.com/news...

Jul 16 10:56 AM

[2houndz:]

This has little to do with subsidizing homeowners and everything to do with subsidizing banks. That was the purpose of the first two mortgage bailouts (Obama and Bush plans), but the only way to avoid shoveling more to banks without a public outcry is to make it appear as if they are trying to help the cash-strapped "little guy".

Jul 16 11:00 AM

[conceptwizard:]

Good point here. The banks will turn their liabilities into income streams. When the housing market turns around they will take all the upside. Another rape of wealth to the banks. This will allow them to keep the FMV on the asset, thus not triggering losses. Someone really has the "mouse on the wheel". I bet that all 25 mortgage companies at the Federal meeting on this jump on board.


On Jul 16 11:00 AM 2houndz wrote:

> This has little to do with subsidizing homeowners and everything
> to do with subsidizing banks. That was the purpose of the first two
> mortgage bailouts (Obama and Bush plans), but the only way to avoid
> shoveling more to banks without a public outcry is to make it appear
> as if they are trying to help the cash-strapped "little guy".

Jul 16 11:07 AM

[Davewmart:]

Don't worry, Ryan, nothing this administration does will ever result in taxpayers money going to the little guy.
It is destined for the banks.
This makes perfect sense. The bank gets the property, it then gets rental income from the taxpayer for a while so it does not have to admit it's assets are worthless.
They then throw the people out and sell as convenient.
I doubt that it will even get that far.
This is probably just another plan to sooth the population and appear to be 'doing something' whilst the banks get the property, which will have provisions set in it so that only a negligible number of people actually get a small delay in being thrown out.
That is what all the measures to date have done, after all.

Jul 16 11:31 AM

[TraderMark:]

Good point there as well. This way they can sell the bailout of the little guy which basically is money that makes a short pit stop at consumer before going to bank.

That said, it is pathetic in every hand it touches.

p.s. I dislike both political parties; I forgot to put my normal disclaimer there ;)


On Jul 16 11:00 AM 2houndz wrote:

> This has little to do with subsidizing homeowners and everything
> to do with subsidizing banks. That was the purpose of the first
> two mortgage bailouts (Obama and Bush plans), but the only way to
> avoid shoveling more to banks without a public outcry is to make
> it appear as if they are trying to help the cash-strapped "little
> guy".

Jul 16 11:36 AM

[awake09:]

So if everyone blames both parties, what's the answer? a Ron Paul redux? It won't happen with the Media deceivers in charge of the airwaves. Republicans are the only people with any clue about what's happening. I didn't say all of them, as we saw in 2001-2008. Bush started this current direction with the TARP and auto bail outs. That policy can be argued, but let's just start with 'now.'

Doe anyone here really think there is a one Democrat with a ball bigger than a pea to stand up against this tyrant in DC? There is only one political alternative, whether you like it or not, and it's not the Green Party. Forget the conservative religious ties if they bother you, and support genuine Lincoln-Republican candidates.

The Democrats are lost, and are not coming back with Hussein, Clinton and Pelosi anywhere near DC. Maybe once they are booted, some sense will return to the D party. The silver lining is that once the disaster has been realized, it will take many years before socialism will get a foothold again.

Jul 16 02:14 PM

[John Galt:]

So who advised on the administration on the national "slum lord policy"? Was it the crooked Tony Rezko or did they think of this plan on thier own?

Steal from the prudent home buyers and steal from those that knew they couldn't afford and rented on the sidelines for prices to come down...

Give to the many people that took out NINJA loans and give to the overly aggressive banks that lent them the money on shoddy loans.

How on earth can you possibly justify this as "fair"? You want to talk about morality... how "fair" is this? Wasn't Obama on some Law review? Non business people always love to complain about the buzzword "business ethics", how about "Lawyer ethics" or "politican ethics"? As if we don't have enough bailouts... please add possibly the dumbest one of all to the list.

Jul 16 02:23 PM

[doubleguns:]

I would prefer to have citizens with term limits and a clear policy. If you like that check out goooh.com.

Citizens for congress not professional party members voting down party lines in order to get the party money for next reelection.

The will leak anything, tell any thing, embarrass our country to no end if it benifits their party or makes the other party look bad and they do not care what damage it does to our troops, national security or image around the world. ALL OF THE PROFESSIONAL POLITICIANS MUST GO.

2010 The house then on to the senate.

On Jul 16 02:14 PM awake09 wrote:

> So if everyone blames both parties, what's the answer? a Ron Paul
> redux? It won't happen with the Media deceivers in charge of the
> airwaves. Republicans are the only people with any clue about what's
> happening. I didn't say all of them, as we saw in 2001-2008. Bush
> started this current direction with the TARP and auto bail outs.
> That policy can be argued, but let's just start with 'now.'
>
> Doe anyone here really think there is a one Democrat with a ball
> bigger than a pea to stand up against this tyrant in DC? There is
> only one political alternative, whether you like it or not, and it's
> not the Green Party. Forget the conservative religious ties if they
> bother you, and support genuine Lincoln-Republican candidates.<br/>
>
> The Democrats are lost, and are not coming back with Hussein, Clinton
> and Pelosi anywhere near DC. Maybe once they are booted, some sense
> will return to the D party. The silver lining is that once the disaster
> has been realized, it will take many years before socialism will
> get a foothold again.

Jul 16 03:46 PM

[babajay:]

How can anyone blame this administration..? This disaster was in the making for years.... Maybe even DECADES.... We are all to blame. Remember "a car in every garage..?" Same idea as "everyone should have a home".
As Michael Jackson would say "I'm staring at the Man in the Mirror".

This medicine, by the time its done being administered, is going to taste so bad, we wont remember what the disease was.

Jul 16 04:46 PM

[Dr. O:]

You guys are freaking me out, and I'm paranoid to begin with! Our fiscal policy is beyond a disaster, and, with taxes set to soar, our economy is bound to get even worse.

The only things that I can think to do besides investing in non-US markets, is to "convert" my dollars in other currencies via FXE, etc, and buy physical gold, silver and platinum.

Silver is nice because its cheap enough to use as currency (and was, of course), but its too cheap to easily use to convert real money into hard assets. That's where gold comes in, although gold "seems" expensive at $900+ dollars an ounce and has been range bound for a year and a half.

>>Every time a country fails the elite, wealthy, connected and politicals make off with the country's money at the last minute. Are the elite, wealthy, connected and politicals getting ready to fleece the sheeple. How much closer are we to the end game now?!!!<<

>>8. 3 times the budget deficit in less than 12 months.
9. Re-Fi's on foreclosures, to people who should not be in homes to start with.
10. Manipulation of stock markets through liquidity injections from the FED to GS and JPM high speed trading computers.
11. Countries running scared on the dollar devaluation, China in particular.
12. Monetization of debt in the trillions. Printing money to buy our own debt.<<

Jul 16 04:55 PM

[nova:]

conceptwizard wrote:

"1. Breaking Bankruptcy laws.
2. Breaking contracts to bondholders.
3. Taxpayers owning bankrupted car companies.
4, Giving the FED a private entity unlimited powers.
5. Giving trillions to banks, mostly unaccounted for.
6. Putting Larry Summers the "Glass-Steagall Kid" in charge.
7. Increasing spending to the military in the time of economic need.
8. 3 times the budget deficit in less than 12 months.
9. Re-Fi's on foreclosures, to people who should not be in homes to start with.
10. Manipulation of stock markets through liquidity injections from the FED to GS and JPM high speed trading computers.
11. Countries running scared on the dollar devaluation, China in particular.
12. Monetization of debt in the trillions. Printing money to buy our own debt.
This stopped sounding like a democracy at point 5. We are becoming a socialist country. "

It is not socialism. Obama is a Trotskyist: an ideological extremist intended to destroy the country masquerading under socialism. Back in Russia in 1918-1922, Trotskyism brought to Russia an economic collapse, famine, a civil war, and state terrorism against its own people.

Jul 16 05:27 PM

[Al-USA:]

There are some who always maintained that capitalism was just another disguise for socialism for the wealthy elites, which this fabricated financial crisis is exposing, in all its "glory". By the way, one of the first to postulate that was Karl Marx, but, it was assumed, hoped, that civilization had advanced, this is after all the twenty first century.

Nothing has changed, what was true of capitalism from its creation out of the cesspool of Feudalism, with its economics of serfs tied to the land and their Lord, continuing into the 1800's, is true today: socialism for the wealthy elites...

When the masses see past the illusion the social contract will be strained, to put it mildly.

Jul 16 07:14 PM

[2houndz:]

AL-US
Your understanding of economic history is baffling, to say the least. Did you completely make this $%#* up, or are you referring to something from another planet or another dimension? Either way, try lining your hat with tin foil and those voices will probably stop.

"Nothing has changed, what was true of capitalism from its creation out of the cesspool of Feudalism, with its economics of serfs tied to the land and their Lord, continuing into the 1800's, is true today: socialism for the wealthy elites..."

Jul 16 08:54 PM

[Moon Kil Woong:]

Conceptwizard: You're on the mark again. I think probably the mortgage companies and banks were the lobbyists that proposed this. Don't you know, politicians don't make any ideas themselves anymore. That is below them.

Regarding the plan, it is essentially re-introducing the 0% down interest only payment plan except this time the borrower is turned into a renter making it even a worse proposition. The good news is if they rip the renter off enough they can claim the property value should be higher relative to rent and rather than have to write off a capital loss on a forclosure can ask a assessor to let them recognize a capital gain.

Thus magically they are a lot better off on the demise of the borrower once again. If this is how Washington rights the economy, please don't help. At this rate they will propose saving money running social security by using prison labor and having Bernie Maddoff oversee the whole operation.

Jul 16 10:39 PM

[Sober Realist:]

Sounds like the our financial oligarchy-controlled puppet government is pulling out all the stops. Gerald Celenti's predictions for 2012 seem more plausible everyday.

Jul 16 11:29 PM

[rm:]

[When the housing market turns around they will take all the upside. ]

Don't be so sure. This is yet another ploy on the denial trail. They're going to eventually take back properties that have substantial deferred maintenance that's been neglected. And there is just no way those properties will see 2005 price levels in our lifetime. The game is to slow the flow of REO properties as much as possible.

Jul 17 08:37 AM

[Blackeyebart:]

It is amazing how fast a past conservative policy becomes inconceivable on the grounds that it is too way out and wacky for words.

In the past the government controlled interest rates on mortgages. As we know the government is the ultimate risk taker on many such investments.

For example: Reducing interest rates to say 3% on existing mortgages would have a very significant effect. The home-owner would not want to sell. Millions of houses would come off the market. And the effect on house prices???

Sure most of these policies have been sliced and diced, but Goldman Sachs would find a way to adjust them. Jeez they would probably make money doing it!

Next year when the green shoots have become fully grown crabgrass, the interest rate could be increase to 3.5% or even 4%.

Yeah I know - whacky! I'll try again next year.

Jul 20 09:52 PM