GNMA: Ginnie Ginnie, Who Can I Turn To?

 

by Gayle Plato

 “Ginnie Ginnie, who can I turn to
you give me something I can hold on to–
now you think I’m like the others before
who saw you name and number on the wall”
 
Okay I took license with the gal’s name, but do you know ol‘ song from Tommy Tutone?  Seems that Ginnie Mae’s got a number of loans secured and is trying to sell the bundles of joy overseas again. Just what we need in Arizona- more mortgage implosion.  This lending isn’t news, but the growing defaults are.  Mortgage crises continue in spite of all cheery recovery chatter; see the proof as the state budget nightmare is now a waking dream and nobody knows what to do.  While the obvious overspending got us here, it is the lack of revenue that will also drive the state right into insolvency. Arizona cannot pretend the property is as rich as it was three to five years ago. We cannot keep assuming the market will come right back either.  Especially since it seems the lending practices in this country are still very sub-prime. 
 
Ginnie Mae is the Government National Mortgage Association. Designed to help Federal Housing Administration (FHA/HUD) loans get to market, the government mortgage backing entity GNMA, repackages loans as mortgage-backed securities. Now the shell game of mortgages and financing is facing another bubble burst.  We are STILL seeing shaky loans up to 125% of value, modifications that leave the home owner on the hook, and tons of mortgage-backed securities built up on air instead of collaterally secured equity.
 
 “Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. ”
 Karl Denninger, a nationally acclaimed market analyst stated this on Monday:

“First you (the government, who is supposed to PROTECT people against predatory scams and frauds) let the banksters literally STEAL people’s hopes, dreams, and money by preying on them with knowingly-toxic exploding loans that they knew in advance would NEVER lead to those Americans owning their own home free and clear.  These loans came in the form of 2/28s and 3/27s for “less fortunate” borrowers, crafted for the singular purpose of turning a free US Citizen into a perpetually enslaved debtor who would never own a damn thing except a payment book.”
(http://www.market-ticker.org/archives/2009/08/10.html)
Um, can you say BAILOUT?  There is a reason why the country is revolting at these town halls.  Ginnie’s number is on the wall, and this next bailout  will cost what? Will it push the trillions owed upwards to, wait don’t tell me: 8,675,309?

 

 

 


Comments

  1. The biggest fallacy in the bailout scenario is that “banks” got the money….and why they did not increase lending after the bailout. It wasn’t their money.

    Those “mortgage backed securities” we keep hearing about are investments held by private investors…just like you and me and our 401K. Which is now a 102.5K.

    The banks did not lend their money held in their accounts, oh no….they have private investors that put their own private money up for the backing of the loan, then get a portion of the repayment interest as a dividend.

    We bailed out private investors who took a gamble on their choice to back those securities. Folks who bought securities knowing the terms of the loan they would be applied to.

    Did they know it was an uninsured risk? YES. Did they take the risk…OH, YEA. How much money had they made on this risk prior? LOADS!

    Oh well….it is all spilled milk now unless we allow the Feds to do it again.

  2. Gayle Rightwoman says

    Ann- Your point is well taken and key to the other aspect of this- we’ve billions sitting in holding as the FED/Treasury buys the debt. Beck’s guest yesterday hit the nail on the head–either you create inflation or raise taxes to pay it down.

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