Friday, September 10, 2010

Obama comes through for speculators in underwater mortgages

The hedge fund candidate has become the hedge fund President. Obama's mortgage moves will enrich hedge funds (such as those run by Obama supporter, George Soros, sugar daddy of the Democrats) who speculated by buying up underwater mortgages to be now made whole by you.

The Washington Times reports:

On Tuesday, the Federal Housing Administration announced a "short refinance option" for underwater mortgages - that is, mortgages on which the amount that the homeowner owes is more than the house is worth. Under this new program, the government promises to guarantee what's left of the mortgage's face value after the mortgage holder agrees to write off 10 percent of the principal.

For some big Wall Street financial houses, this could represent a major windfall. Some of these firms bought risky mortgages at huge discounts from their face value, often just 40 percent or 50 percent of the amount owed. Say a Wall Street firm paid $250,000 to take over a risky $500,000 mortgage. If the firm agrees to reduce the face value of what is owed by $50,000, the FHA will guarantee the mortgage. Thanks to the protection from default, the loan's value instantly increases from $250,000 to $450,000 - a $200,000 gift to the Wall Street mortgage holder.

While the Washington Times focuses on Wall Street, many of these mortgages have been bought up by hedge fund investors as well. Obama attacks fat cats on Wall Street for partisan and populist reasons to rile his base and bring them out to vote and to worship him. Meanwhile, he pulls fast ones to enrich them at our expense. In other words his rhetorical attacks against wealth are, in his own words, just distractions.

One always has to watch what Obama does behind the scenes. We know most of the media won't.

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