Skip navigation
MOST POPULAR RELATED TAGS
  • TOPICS
  • SECTORS
  • COMPANIES
 

  Current Housing Indicators
CURRENTPREVIOUS
Existing Home Sales4.91m5.02m
New Home Sales460,000520,000
Housing Starts817,000872,000
Building Permits786,000857,000
HMI1417
Existing Home Prices$203,100▼ (annually)$224,400
New Home Prices$221,900▼ (annually)$236,500
 
Realty Check Video Gallery
The $800 billion move from Treasury is having a big impact on mortgage rates. Greg McBride, of Bankrate.com, and CNBC's ...
There were more troubling statistics out today in the housing sector, and CNBC's Diana Olick has the details.
 
HOMEBUILDERS TOP 10 INDEX
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
See all Realty Check PostsRealty Check with Diana Olick
Text Size
Sep.19
1:51 PM ET
Friday, 19 Sep 2008
Will the Government Own Your Home?

CNBC.com

Let me just preface by saying we don’t and can’t know any of the details of the financial rescue plan that will come out of the negotiations between Treasury Secretary Henry Paulson and members of Congress.

Even the insiders I’m talking to, who know far more than I do, and who will be at the table, are answering my questions with: “Honestly, I’m just not sure.”

However, Treasury officials have said that the plan would likely involve the government purchasing mortgage backed securities as well as whole loans. Now the mortgage securitization process is so ridiculously complex, that I’m not even going to begin to explain where in the process the government could step in, so let’s stick to the whole loan side of the equation.

If the government is buying loans in order to get them off the balance sheets of distressed banks, and these loans are expected to be delinquent at some point soon, then what is the government's course of action once they take ownership of the loans?

Last fall, Henry Paulson spearheaded the “Hope Now” coalition of lenders and investors, the purpose of said coalition being to save borrowers by modifying and restructuring troubled loans. Does the government now join "Hope Now" itself and get in the loan modification business? But wait, if the government’s goal is to maximize taxpayer return, then that is in direct conflict with letting borrowers off the hook, right?

The politicians want the loans saved and the homeowners kept afloat, but that, in most cases, means losing money on the loan. Then there’s the issue of selling the asset at a discount…does that produce more return than the loan restructuring?

What I’ve heard is that the government would hold these assets to “maturity.” But again we’re faced with the unknown. We don’t know how many of these assets (loans) will perform and how many won’t.

Just putting my questions out there.

For Investors

Questions?  Comments? 

© 2008 CNBC, Inc. All Rights Reserved

Permalink: /id/26793305

HOME  |  NEWS  |  MARKETS  |  EARNINGS  |  INVESTING  |  VIDEO  |  CNBC TV  |  CNBC PLUS  |  CNBC MOBILE  |  CNBC HD+
About CNBC   |   Site Map   |   Privacy Policy   |   Terms of Service   |   Advertise   |   Help   |   Feedback   |   Video Reprints
  Data is a real-time snapshot   *Data is delayed at least 15 minutes

Global Business and Financial News, Stock Quotes, and Market Data and Analysis