Thursday, Fannie Mae announced their new “Deed For Lease” program, through which home owners facing foreclosure can deed their property to Fannie Mae in exchange for a 1-year lease (with likely extensions) at current market rates. This program is expected to only be available to those who have tried and failed at other solutions such as loan modifications or other loan work-out solutions.
Let’s remember that Fannie Mae is an extension of the U.S. Government, therefore what’s actually happening here is that the government is dramatically expanding its role as an owner of private residences. This continues a trend I exposed to you here back on January 13, 2009.
The questions are: Is this wise? Is it legal? Is it reasonable?
My gut feeling about this is bad. My inherent bias is that the federal government should have an extremely limited role in our lives, and that’s particularly true when it comes to ownership of homes.
A reasonable point of dissent with my opinion might be that other lenders have the right to do this sort of thing, and that is certainly true. However, other lenders aren’t owned by the federal government. (Correction: Several major lenders now are essentially owned by the federal government, as Obama’s march to socialism continues.) Non-government lenders don’t have automatic political conflicts of interest in place and are instead subject largely to the demands of the capital markets. The same is not true of governments, regardless of who is in power.
The cold, hard truth is that the federal government tends to use its financial assets and capabilities as vote-buying leverage. That’s what welfare is. That’s what Social Security & Medicare are. That’s what the new health care legislation will become if passed (God Forbid…)
And the new Deed for Lease program will be just another pawn used by whatever administration is in power.
The government just refuses to learn or accept that it is not all-powerful For example: Here we are, months after the Obama administration has pumped hundreds of billions of ’stimulus’ dollars into the economy, and all we have to show for it is the highest unemployment rate in over 25 years, plus a deficit that’s orders of magnitude larger than when Obama took office. Believe it or not, this isn’t [just] a shot at Obama. It’s a suggestion that we all need to realize that free market forces are infinitely stronger than any government program, and the real solution here is to step back and allow our economy to heal itself.
One way that could happen is to let the existing system go to work: When properties face foreclosure, foreclose them. Sell those properties to the highest bidder. The new owner has the option of renting the property to the existing occupant. If it makes sense to do so, it will be done. If not, then a painful lesson will be learned… but I’ll bet the errors in judgment leading to that foreclosure will not be repeated.
So that’s my laissez-faire capitalist rant for today. What say you? Sound off in the comments section below with your thoughts about this… and as always, thank you for reading http://realestate.BryanEllis.com! (And remember our special webinar this Wednesday night at 9:00 PM ET - more information here.)
SECURE & CONFIDENTIAL
8 Comments So Far»
A year ago, I thought that you people who were always complaining about government and how much power it has were just a bunch of nutballs. But I’m starting to agree with you…this deed 4 lease thing seems like a good idea but will probably be turned into a “power grab”
For anyone old enough to remember the “Projects” of Chicago or any of the other Public Housing scams run on the American people, you know how that turned out.
The police would not even respond to thes blights on society, there is no reason to think this will be any different. If you have a complaint who is going to help you out? Some lazy ass beauracrat, the police, the city council? None of them are going to do anything, just like the other times we have had these massive public housing projects!
This is turning something that would work itself out over the next few years into a blight and economic drain on our country for decades.
Here is a small part of an article about Fannie Mae, does show how shady and dishonest they are, is this an agency we want handling anything with real estate any more? I think not, they should be disolved, just like Lehman Brothers.
“Nov. 6 (Bloomberg) — Fannie Mae, the money-losing mortgage-finance company seized by regulators, said it has $15.8 billion in claims against bankrupt securities firm Lehman Brothers Holdings Inc. that it will at best partially recover.
“Based on Lehman Brothers’ financial condition, we believe we will only receive a portion of these claims,” Washington- based Fannie Mae said in a filing with the Securities and Exchange Commission yesterday. The announcement came as the company posted its ninth-straight quarterly loss, of $18.9 billion, and said it will need $15 billion more in federal aid.”
This is one more Obama attempt to overthrow the constitution of the United States, to support the third world countries he so desperately wants to turn us into also. Do you feel your freedom to do anything slipping away, if you do not, then wake up, money does not grow on trees, if it did we would not have the economic issues we are currently experiencing.
We have a government that is being lead by some people that would not just sell their own soul for power, but would happily sell everyone of us into slavery to keep their power. Soon we will lose the freedom to choose our own health care. This will be used to take away the Second Ammendment, freedom to buy which food you want to eat, even which sports you can be involved in and Freedom of Speech is being taken away as I write this with Obama’s crazy rantings about Fox News not being a real news agency. I did not know I had been spirited away to Venezuela over night as I slept!
We are watching our rights as citizens being stripped away, loss of privacy, soon loss of ownership of a car, home, land. What will be left when the crazy bastards in Congress get done with us? Sham elections, (do I hear banana republic), no rights of getting medical care if we do not fit into the proper age or proper illness, (do I hear Hilter’s Germany). Going to a polling place where some assholes with weapons tell us if we can go in or not after asking who we are going to vote for. Unions stealing the life blood from people by telling us we are going to vote for them because the law will be that we have no right to privacy in voting any longer. Socialist, no sounds more like Marxism, Obama role model by his own words.
So my opinion of the lastest Fannie Mae housing takeover is just one more criminal action by criminals such as Barney Frank that only thinks the laws and paying taxes applies to you and I not him or his buddies. If we were running a whore house downstairs we would go to jail, all he has to do is claim he did not know anything about it, just like his income or taxes. How many of you have no idea how much money you are making? Is this really who and what we want in charge of housing in what is left of our country?
This plan, like government health care, will destroy the livelihood of everyone reading this post if allowed to stand. The rules pushed onto us by the upcoming rules that will follow this takeover, will make it impossible to run any kind of legal or legitimate business in real estate. So let me sum this up.
If this stands we can all kiss off any idea of making any money in real estate investing. For those loving Obama I am sure that is fine because it is becoming apparent this is the direction many want this country to head!
In the beginning I didn’t agree with nothing you said, but after doing a lot of research I fully agree with what you say about this economy and the housing market.
You are clearly an ideologue.
kindly stick to business so that we, other investors, can all benefit from what you have to share and not have to be repulsed by your right wing gimme the money and f*xkk the rest of you attitude
Your i got mines—too bad if you dont got yours! point of view!.
you have a problem with people getting a break through the help of the government???? instead of looking at how this might help some people actually keep their homes, you want to do the “govmint is taking over” bit. Following this logic, anything creative that the government might try to help the multi-millions of homeowners avoid falling into the the Wall Street black hole, is a conspiracy against the entreprenuerial efforts of investors to make some cash. Do you really think, that this or any other positive program to help stabilize the real estate market is not ultimately beneficial to us????
you do a great disservice to the investors who intend to profit by ACTUALLY HELPING PEOPLE not just ourselves.
SHAME ON YOU!
I’m curious - do you have any understanding of the notion that there’s a limit to the role of the federal government? Before I expose your argument as a shining star of astounding daftness, I’d like to make sure we start from the same premise. — Bryan Ellis
I really agree with the idea that the government will make a bad (horrible) landlord. All this does is keep them from having to foreclose and save all those fees.
They get you to sign over the property and then lease it back to you. When you can’t keep up with the lease, all they have to do is evict you saving thousand per deal in time and money.
Alternate Solution: If they sold them an adjustable rate rip off mortgage, put them on a fixed rate down where they can afford it and leave them alone.
First of. I am from a so called “Socialist” country that you guys seem to be so damned afraid of. Not only that bet the best country to live in which is Norway….and the only reason I’m here is because of a child custody case, just to keep the “so go back home” kiddy argument away.
My brother is a multi millionaire in Oslo, he didn’t even finish high school and he has his own real estate development company, he built from scratch!!!
That’s really great…congratulations to him! Imagine how much better of he’d be - and how much more he could do for those around him - if more than half of his income wasn’t immediately confiscated by the government! Bryan Ellis
Now are you going to tell me that socialism is so bad??? Before you go talking about a system you have not lived, you have no idea what you are talking about!! I do, I have lived both and I would take socialism above greedy capitalist any day!
Yes, socialism is bad. It’s not just bad policy, it’s morally wrong. It benefits the government above all, and compensates the poor to remain poor. That is the highest form of theft. Bryan Ellis
You guys over here are so greedy you can’t even understand how this will help many people as well, all you see is how your own wallets wont be as fat!!
My dear readers, this particular commentator doesn’t understand the difference between “greed” and “rights”. Is it greedy to insist upon having control of the results of our efforts? If you think so, you should move to Norway. Bryan Ellis
So if it really is such a big problem…In the spirit of the universe there is always a solution. one needs to figure it out there is always a way. Instead of whining about the changes find a solution to the changes!!!
On this, we agree. Bryan Ellis
To safeharbor and Norway boy,
Show us one government program that runs even kind of well? Waiting, waiting, oh wait a minute there are none!
It is not about being against the socialist countries or against people being helped. It is about theives like Barney Frank and Pelosi and other extremist like them stealing liberty from others.
The money the government spends is not made by the government, it is money made by real people being forced to pay taxes to support things that are so poorly run we as a counrty are going bankrupt. If you have a hard time seeing this then go get a job selling hamburgers or something easy like that. If you do not understand why people are going into foreclosure then this is not a business for you. Foreclosures are not the fault of Wall Street, the Banks or lack of regulations. Foreclosures are the result of people not reading what they are signing, listening to people as stupid as themselves and sometimes just damn poor luck.
If you every want to understand the reasons for foreclosures and the faultering economy here and around the world, (what is the standard unemployment rate in most of Europe?), look at what has been happening to manufacturing around the world.
As for the great benifits of Norway, it seems the Nazi’s had a socialist program for you to follow but also seems you wanted our help to avoid it. I also know the governments of Europe are extremely worried about the erosion taking place in their societies from outside influences and the falling ability of the governments to support the programs they currently have in place. We are just entering a period of unemployment similar to what France has had for the last two decades. What does that tell you? Did you know a million pounds buys you little more than a crappy house in England, what does that mean? Think about what you are saying and quit shooting off your mouth without some facts involved with your words.
If the United States pulled out of Nato and forced Europe to defend itself and actually spend what is really being spent on their defence budget, the economy of Europe would fail within the year. I am not guessing about this, it is easy to find and comes from inside sources.
So the socialist experiment of Europe is not doing so well and I can see no reason to follow it here.
Found this interesting information about the Utopia of Norway, looks scary for the long term.
Post-industrial economic developments
GDP growth 1865-2004Several issues have dominated the debate on Norway’s economy since the 1970s:
Cost of living - Norway is among the most expensive countries in the world, as reflected in the Big Mac Index and other indexes. Historically, transportation costs and barriers to free trade had caused the disparity, but in recent years, Norwegian policy with respect to labor relations, taxation, etc., have contributed significantly.
Competitiveness of “mainland” industries - the high cost of labor and other structural features of the Norwegian environment have caused concern about Norway’s ability to maintain its cost of living in a post-petroleum era. There is a clear trend toward ending the practice of “protecting” certain industries (vernede industrier) and making more of them “exposed to competition” (konkurranseutsatte). In addition to interest in information technology, a number of small- to medium-sized companies have been formed to develop and market highly specialized technology solutions.
The role of the public sector - the ideological divide between socialist and non-socialist views on public ownership has decreased over time. The Norwegian government has sought to reduce its ownership over companies that require access to private capital markets, and there is an increasing emphasis on government facilitating entrepreneurship rather than controlling (or restricting) capital formation. A residual distrust of the “profit motive” persists, and Norwegian companies are heavily regulated, especially with respect to labor relations.
The future of the welfare state - since World War II, successive Norwegian governments have sought to broaden and extend public benefits to its citizens, in the form of sickness and disability benefits, minimum guaranteed pensions, heavily subsidized or free universal health care, unemployment insurance, etc. Public policy still favors the provision of such benefits, but there is increasing debate on making them more equitable and needs-based.
Urbanization - for several decades, agricultural policy in Norway was based on the premise of minimal self-sufficiency. In later years, this has given way to a greater emphasis on maintaining population patterns outside of major urban areas. The term “district policy” (distriktspolitikk) has come to mean the demand that old and largely rural Norway is allowed to persist, ideally by providing them with a sustainable economic basis.
Taxation - the primary purpose of the Norwegian tax system has been to raise revenue for public expenditures; but it is also viewed as a means to achieve social objectives, such as redistribution of income, reduction in alcohol and tobacco consumption, and as a disincentive against certain behaviors. Three elements of the tax system seem to attract the most debate:
Progressive taxation. At one time one of the most aggressive in the world, the top marginal tax rate on income has been decreased over time. In addition, Norwegians are taxed for their stated net worth, which some have argued discourages savings.
Value-added tax. The largest source of government revenue. The current standard rate is 25%, food and drink is 14%, and movie theater tickets and public transportation 7%.
Special surcharges and taxes. The government has established a number of taxes related to specific purchases, including cars, alcohol, tobacco, and various kinds of benefits.
Environmental concerns. A number of political issues have had their origins in economic concerns, including the refineries at Mongstad and the hydroelectric power plant at Alta.
[edit] Economic structure and sustained growth
The emergence of Norway as an oil-exporting country has raised a number of issues for Norwegian economic policy. There has been concern that much of Norway’s human capital investment has been concentrated in petroleum-related industries. Critics have pointed out that Norway’s economic structure is highly dependent on natural resources that do not require skilled labor, making economic growth highly vulnerable to fluctuations in the demand and pricing for these natural resources. The Government Pension Fund of Norway is part of several efforts to hedge against dependence on petroleum revenue.
Norwegian exports in 2006Because of the oil boom since the 1970s, there has been little extensive government incentive to help develop and encourage new industries in the private sector, in contrast to other Nordic countries like Sweden and particularly Finland. However the last decades have started to see some incentive on national and local government levels to encourage formation of new “mainland” industries that are competitive internationally. In addition to aspirations for a high-tech industry, there is growing interest in encouraging small business growth as a source of employment for the future.
There is continuing debate over the role of the public sector in Norway’s economic development. Although there is broad consensus that Norway should pursue a mixed economic model, there is a persistent ideological schism between those who favor free market forces vs. socialist mechanisms.
In 2007, Norway saw a massive 6% growth of its economy, outpacing any other western nation. However, the growth was mostly due to increased consumer demand, and is expected to slow down in 2008.
Any country that is the most expensive in the world is on the brink and the long term outlook is not favorable. The oil resevers of the North Sea are falling quickly and several fields have shut down. So you might want to think about putting something away as it is looking questionable over the long term in Norway, if you do not see that the greed of the government in Norway is screwing the populace then there is nothing left to say except, I told you so.
Leave Comments Below»
Gravatar are enable in this blog, if you want a picture associated with your comments, register yourself a gravatar here