Wednesday, November 7, 2012

MBS Market: "Odds Go Up for Mortgage Mods Post Election"

Yes, VIRGINIA, there is an MBS market. It exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy....
From Bruce Krasting:
This man is Christopher DeMarco. He’s the acting head of the Federal Housing Finance Authority (FHFA). He’s going to lose his job in the next six weeks.

Democrats want to go back to the good old days when Fannie and Freddie were tools of both the Congress and the Administration. The Dems want the D.C. mortgage agencies to write off all underwater loans. The goal is to socialize the losses that borrowers are faced with.

DeMarco has been under attack by the liberal wing of the Democratic Party for the better part of a year.  Democrats have wanted debt relief for underwater homeowners. DeMarco’s job as the head of the FHFA is to “minimize taxpayer losses at Fannie and Freddie”.  As a result, he has a conflict with broad based principal reductions. “Very Important People”, like Paul Krugman, have been attacking De Marco for months.

The reason that DeMarco is still standing is that he has clout behind him in the form of the Senior Senator from Alabama, Republican, Richard Shelby. 

With the election over, Obama doesn’t have to play Washington politics any more. He can afford to piss off powerful guys like Senator Shelby. And that’s exactly what he is going to do.

Sometime between Christmas and New Year’s, Obama will fire DeMarco, and he will make an executive appointment to replace him. Whoever is the new boss at FHFA on January 1, will have clear orders on what to do. A hallmark of Obama’s second term will be wide scale mortgage debt relief.

The driving forces to kick DeMarco out (and get a pro-principal modification guy/gal in) has been these two Congresspersons....MORE
Apologies to the ghost of  the New York Sun's Francis Pharcellus Church who scribbled the most reprinted editorial ever written in the English language.