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The value of a mortgage investment vs renting

Recently, we’ve seen multiple news stories suggesting buying a home and having a mortgage is not necessarily a good investment, and when making the decision to buy a home, you really should not consider it as an investment vehicle since your “rate of return” would suck. Why has this become a news-cycle theme all of a sudden?

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There is NO reason the federal government need be involved with mortgages

None. Zero. Absolutely not. There is no reason the federal government need be involved with approving home mortgages, yet for some reason we’re now dependent on the federal government for what used to be a simple individual voluntary arrangement and a transaction between that specific individual and their bank.

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Dualing headlines concerning housing economy

These reports are based on two different measures, new housing sales and existing housing sales, but tell me if there is a difference in the way the economic news is pitched.

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Dems to Media: Leave Dodd Be … Move Along

Dennis House interviewed the Connecticut Chair of the Democratic Committee on Face The State. The short hand version is in the post title. Nothing to see here … move long.

This might be what she hopes, but not likely. Flashing mortgage papers in front of reporters who likely know as much about finance as the average Joe, is not transparency … it’s a side show. And offering a hired gun as an independant auditor is not absolving, it’s misleading and deceptive.

Connecticut Senator Chris Dodd has finally, sort of, kind of, ended 193 days of stonewalling about his sweetheart loans from former Countrywide CEO Angelo Mozilo. At least he did if you were a fast reader and were one of the few reporters he invited to his Hartford office yesterday to review — but not copy or take — more than 100 pages of documents related to his 2003 mortgage financings through Countrywide’s “Friends of Angelo” program.

Add to that additional questions raised by Courant columnist Kevin Rennie about Chris Dodd’s real estate deals in Ireland and DC … it ‘s not over , rather it’s just beginning.

Of course all of this could be resolved by releasing the mortgage papers, and expense agreements with real estate partners. And there’s probably little chance of that as well.

Houston drops idea to pay off personal debt

A proposal to hand out $3,000 to individuals who did not have  good enough credit score to qualify for mortgages has been crossed off the Houston city council agenda this week.

The idea was to use the $3,000 to help individuals improve their credit score by a few points so they would qualify to buy a home.

Of course, it really does not matter that these individuals should not be buying a home in the first place.

The mayor got a bit embarrassed by all of the news coverage on Web sites like Drudge Report and nixed the idea before it got to council. You can bet if liberals were able to do this on the sly, it would have gone through and taxpayers would be paying off credit card debts and car loans for folks with crappy credit scores so they can buy a house that they can not afford.

From the Houston Chronicle

Mayor Bill White this afternoon announced that a plan for the city to pay off some debts for first-time home buyers has been pulled from tomorrow’s City Council agenda.

Council members are now professing their “embarrassment” about the proposal, which has hit the national news circuit, including drudgereport.com., which picked up this morning’s Houston Chronicle story about the plan

“This issue has hit a nerve across this country,” said Councilwoman Anne Clutterbuck. “Not just here in the city of Houston. Giving people the ability to increase their credit score artificially because we’re allowing them to pay off their credit cards is exactly what got us into this (national economic) crisis in the first place.”

No kidding?

Loose talk sink stocks

During WW2, there were whole informational campaigns warning against the consequences of loose talk. “Loose Lips Sink Ships” is, perhaps, the most famous, but there were others.

Today, we need to update this campaign to educate our legislators — Loose Talk Sink Stocks.  Our senators especially could benefit from such a campaign.

Charles Schumer started a run on the IndyMac bank with his comments last summer.

Timothy Geithner rolled out his “not a plan” and the markets crashed more than 375 points.

Most recently, our own Christopher Dodd answered a banking question, sending stocks down another 100 points with his ruminations on nationalization of banks.

Read the whole rundown here.

Bailing Out The House Flippers

I will post more details as they become available. But the thrust of the plan is simple. Help homeowners who are underwater or can’t afford the monthly payment.

* Enable refinancing for 4 million to 5 million “responsible” homeowners who took out conforming 30-year fixed mortgages with an 80 percent or lower loan-to-value ratio and are current on payments.

* The decline in home values means many of these families cannot qualify for conventional refinancing because their loan-to-value ratio would exceed 80 percent.

* The program would allow mortgages owned or guaranteed by Fannie Mae and Freddie Mac to be refinanced, reducing monthly payments.

But how is this fair? And doesn’t this just disrupt the housing market. And for what, for whom?

Last night CNBC’s David Faber made an appearance on Hardball and discussed the current financial crisis. Chris Matthews, and he wasn’t wrong, lays much of the blame on Countrywide but believes homeowners are innocent because they were duped.

Not so says David Faber. To be sure there were some who were poor … but the majority knew exactly what they were doing.

Adding fuel to the fire … Jeremy Brandt of 1800 Homeowners says … homeowners in California who could pay their mortgages, but whose homes are currently underwater (owe more than they are worth)  are deciding to hold back to take advantage of the Obama plan.

Great … so we help the irresponsible become more irresponsible while we continue to toil for the irresponsible and us. Nice. Welcome to the new government controlled financial sector.

More proof Democrats let financial crisis happen

For those of you not paying attention, during the past 72 hours the financial crisis has been clearly explained more than a few times, and now the main stream media is catching up. Jim Angle – Fox News contributor – has a great video report that sums up the crisis again. The truth will be told.

Author note: While I’m away from the computer, I’m republishing my top 20 posts from 2008 each afternoon. -Steve

Jim Vicevich covered this tonight, Hot Air is on top of it too.

Malkin is covering the FBI getting involved, and Gingrich is calling to kill the bailout bill.

Don’t forget to review my post yesterday, which links to Kevin Hassett’s commentary on Bloomberg.com that is simple and clear for all to understand.

There is no excuse for you to fade off on this subject, thinking it is too hard for you to understand. Especially if you’re considering voting for Democrats this election season.

Get out and vote – put conservative Republicans back in power.

Quick note: commenter lynda over at Vicevich’s show tonight had a good one. “Jim Angel better have someone taste his food from now on.”

Bloggers push results in Dodd mortgage action – Updated

Sen. Chris Dodd (D-Countrywide) has announced that he will refinance his mortgages through a third party and switch them to a different broker.

Dodd maintains that he was not a friend of Angelo, and has been wrongly accused of requesting favorable rates from Countrywide. I assume that the Senate Ethics Committee investigation continues. Guess he still does not get that he is held to a higher standard, especially when you are the chairman of the United States Senate Banking Committee.

Dodd has been pressured by this blog, Glenn Renoylds at Instapundit and Kevin Rennie at the Hartford Courant.

From the AP

Sen. Chris Dodd says he’ll refinance two mortgages that he received through a VIP program from Countrywide Financial Corp.

Dodd told reporters in his Hartford office Monday that the mortgages for his homes in Washington and East Haddam, Conn. will be refinanced with a different company.

The chairman of the Senate Banking Committee says a third party will be involved in choosing the new bank.

Dodd has acknowledged receiving mortgages in 2003 through a VIP program at Countrywide, which was sold to Bank of America Corp. earlier this year and has been the focus of allegations that it gave favorable loan terms to lawmakers.

Dodd says he’s moving the loans in part because he was wrongfully labeled a friend of Countrywide’s former CEO, Angelo Mozilo. Dodd says he never sought special treatment.

Malkin and Hot Air are on it.

Our previous articles…

Oh heck, just click here to run a search at our site.

Update: Here is video from an interview with Alan Cohn at WTNH. Thanks to commentor Rick-WH for the tip.

UPDATE (Jim):

Senator Chris Dodd announcing today he intends to refinance his two “Countrywide” mortgages made me think a bit.

HARTFORD, Conn. — Connecticut Sen. Chris Dodd said he’ll refinance two mortgages that he received through a VIP program from Countrywide Financial Corp. Sen. Dodd told reporters in his Hartford office Monday that the mortgages for his homes in Washington and East Haddam, Conn., will be refinanced with a different company. The chairman of the Senate Banking Committee said a third party will be involved in choosing the new bank.

“I just wanted to put this behind us,” said Sen. Dodd, speaking to reporters in his Hartford office.

My guess is it was more a question of having to refinance … or face a likely pretty hefty bump in his current two mortgages. Let’s take a look at what we know:

Senator Dodd received two loans in 2003 through Countrywide’s V.I.P. program. He borrowed $506,000 to refinance his Washington townhouse, and $275,042 to refinance a home in East Haddam, Connecticut. Countrywide waived three-eighths of a point, or about $2,000, on the first loan, and one-fourth of a point, about $700, on the second, according to internal documents. Both loans were for 30 years, with the first five years at a fixed rate.

The interest rate on the loans, originally pegged at 4.875%, was reduced to 4.25% on the Washington home and 4.5% on the Connecticut property by the time the loans were funded. The lower rates save the senator about $58,000 on his Washington residence over the life of the loan, and $17,000 on the Connecticut home. The former employee says the float-downs were free. Senator Dodd’s wife, Jackie Clegg, said in a brief interview that two other lenders they checked with offered comparable interest rates. The senator’s office said Thursday afternoon that it is preparing a response.

Dodd’s current 4 and quarter rate would likely be readjusted to something a good bit higher than 5% … depending of course on the terms of the original mortgage (for instance there might be a cap, or not)… which of course we don’t know because he has not released his papers. Current fixed rates range between 5 and 7% depending on the bank, the location of the home, and of course if you are a member of the Democratic Congress. Given the $800,000 in mortgage loans … that’s a lot of dough he’ll have to fork over.

Call me cynical but to me it looks like this refinance is matter of personal necessity rather than some sudden quest for a more ethical loan agreement.

What’s more, there are plenty of people facing similar circumstances on their own homes these days. Some just can’t find a bank willing to refinance, and others, Democrats remind us frequently,  are losing their homes because their rates are being bumped into the “unaffordable” range. My guess is is neither will be a problem for Connecticut’s senior Senator.

Oh and one more time …Where in the world are Chris Dodd’s Mortgage Papers?

AP story notes Republican involvement in GSE mess

I’m fully on board with blaming Democrat lawmakers in Washington for contributing to the mortgage crisis that started with Freddie Mac and Fannie Mae. Republicans introduced legislation that would more closely regulate the government sponsored entities (GSEs). Democrats – including Barney Frank (D-Mass.) – blocked that legislation, all but calling those asking for the changes racist.

Fox News and bloggers brought those stories to light, and now the Associated Press has written a story targeting former Republican lawmakers and staffers who were hired in 2006 by the GSEs to help keep Congress off their back. I’m willing to hear the evidence from 2006, but remember that the damage was already done by this time.

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