Fed's Housing Fix Broken?

" Next guest says Fannie and Freddie and FHA or setting us up for the mother of all bailouts bigger than --"

" Is even predicting it here for a while on FBM real estate attorney and help buyers Stephen Meister. Joining us now more at at and why would this be bigger then the TARP and the stimulus."

" Because the size of the mortgage balances on -- these books and friends -- books we're talking about was. Something on the order of twelve trillion dollars of mortgages in the United States and hair for more are held by these companies. They're deeply under Warner they've been given a 11520000120. Billion dollars of bailout funds already. And what's happened is that or the private. Investors have been chased out of the marketplace so when we hit that 200 billion dollar cap. We don't know what's going to happen there because all the mortgage money will be gone."

" Now we have a debt ceiling in this country of twelve trillion dollars the government is about to try to raise that. Your suggestion they should be doubling -- in order to guarantee these won't fail."

" Well there's going to be an enormous an enormous -- really it really concerns -- it honestly does because. Right now our whole market is entirely prop up. By all this subsidy. Add the FHA insurance and we heard commissioner Donovan talking about the FHA falling below with their reserve requirements. Buyer very large margin and what's going to happen is Fannie and Freddie if they don't have -- in receivership. There are a 100% of the mortgage market if they don't have continued government assistance we're not going to have a mortgage market. The real answer I think is from the bottom up jobs we need jobs in this economy not subsidies. To the mortgage like that."

" And a court -- the lead of our shows that the president is going to have a job summit we'll see if that really creates anything at the moment but what. What do you think about the landscape of jobs right now."

" I think. If the health bill that was passed by the house house gets asked. By the Senate we're in deep trouble us not going to black going to actually as it is it's not going to fears that five point 3% that surcharge. On the you can come over I think it's a million dollars. That results and there was an Op Ed piece in The Wall Street Journal today. In a 69%. Increase in the capital gains rate because it's going from fifteen to twenty. When the bush cuts expire and then it goes from twenty effectively 25 point four. If you look at that ten point four on fifteen it's a 69%. Increase that's going to crush small --"

" A fact of mortgages though today we have news that the treasury again is buying more mortgage backs -- to FedEx you to buy more mortgage backed securities we saw interest rates come down. Below 5% the mortgage rates which is extraordinarily low. How much longer does -- go on the game of artificially keeping interest rates low till I think we hit that 200 billion dollar limit. And then I think we're in for. A lot of trouble to think."

" the other way. Which let's go back to the housing bubble and you know although we saw with with President Bush and and Henry Paulson coming out 2005 and six every month. At the rose garden and saying this is the best we've we've had no we've never had so much homeownership effort. That obviously didn't work -- what's the answer."

" You answer is -- is that there is a natural level of home ownership that this country can't sustain we've always had in this country since world war true. As part of sort of the American DNA a promotion of Kono homeownership but -- concept. Was radicalized. And homeownership which was about 50% almost 50% renters. Prior to World War II was pushed up. To around 70%. Through all of this subsidy trying to help out poor and moderate income people and all of these sub prime loans. And it's not sustainable we can't force feed money to people who can't afford the down payment and can't afford to pay back alone but we're still doing it. Because that 35 billion dollar bail out. To the state HF -- in connection with the first time homebuyers tax credit. Is the government making sub prime -- happens all the inventory we -- this huge buildup of housing inventory -- is just sit there for a decade or more and well let me say that's what's happening is the home affordable modification mortgage modification program that a bomb boat rolled out in February. And then modified. In I think April. Is. Holding back -- clause in the lenders to hold back on the foreclosure process because there waiting. For the gravy train of the federal payments on the -- NHL you get foreclosures you're not going to clear the inventory exactly that week we look. We kick you put off the day of reckoning. It's more painful that's the bottom line like so many things from like you have to take your medicine the markets will not be did not. And we need to have this markets settle and at a self sustainable. On subsidized level. We -- to grow the economy by on burdening businesses create jobs and enable people to pay back their mortgages. That's what we need to do."

" Okay paying back the mortgages -- right now mortgages are really cheap because of the Fed and treasury are propping everything that's right but with its unsustainable if clearly is not sustainable. They should've never got into the business in the first place that's right."

" And and you know with all the printing press that's going hundred Washington and pool the two dollar sliding from all the spending we're -- The foreign investors who were now. Who were now going crazy with this especially nature and we have that that conference coming up. Via worried they're not going to be buying US dollar denominated investments because they're afraid that the --"

" But instead -- Madison letting the foreclosures -- we still have Barney Frank and others saying we -- help out -- help would stay with -- all of these foreclosures with more government money and and and that the first time homebuyers tax credits perfect example of that that 8000 dollars. They're making bridge loans through more sub prime loan Stephen my -- good to see -- thank you."