Finally. Some honesty on an issue that most bank executives won't talk about. Bank of America Chief Executive Brian Moynihan said yesterday at a meeting with analysts in New York that the administration's push to get banks to forgive billions in troubled mortgages is unfair to borrowers who've been paying their mortgages. The White House along with 50 state attorney generals are pushing for a multi-billion dollar settlement with banks in the wake of foreclosure abuses by lenders. The problem with the solution proposed by government officials, according to Moynihan, is that it would take away any incentive for homeowners who have jobs to pay their mortgage. After all, why pay if banks are ponying up dough for people who don't? Such a scenario would only delay the recovery in housing. And, goodness knows, we've been waiting too long for that already.
Check out the story today in The New York Times on Fannie Mae and Freddie Mac. You can't miss it - it's on the front page. And, it's guaranteed to scare the living daylights out of anyone thinking about buying a home. The story says you can kiss your 30-year mortgage goodbye. The reason? The death of Fannie Mae and Freddie Mac, the mortgage giants at the center of the financial crisis. Both the administration and Republicans agree it's time for these two - propped up by $150 billion of our taxpayer dollars - to go. But the Times story maintains that mortgages will become more expensive - rates higher, fees out of sight. Look, just because lenders have been on the sidelines in the months following the financial crisis doesn't mean they always will be. When the cloud that is regulatory uncertainty passes and prices stop falling, I believe they will get back in and in a big way. The reality is this: We don't need Fan and Fred to oversee the housing market to boost home ownership. We have some of the lowest rates of home ownerships as it is among developed countries. Fan and Fred have bought us nothing but trouble.