Developing Affordable Housing Ecosystems World Wide
By:David A. Smith [Concluded from yesterday's Part 2 and the previous Part 1.] So far in this lengthy post we’ve dismantled two pillars of the argument, advanced by a recent New York Timesarticle, that Fannie Mae and Freddie Mac are acting arbitrarily in refusing to allow waivers of principal on home loans they [...]
By:David A. Smith [Continued from yesterday's Part 1.] Yesterday we showed that, despite what a recent New York Times article would have you believe, refusal to agree on unilateral cuts of mortgage principal owed by homeowners whose houses may be worth less than those loans isn’t stubbornness by a single individual but is rather [...]
By:David A. Smith Precedent is an asymmetric concept; if I as a borrower want to misbehave, anything I do has no binding effect on any other misbehaving borrower, but if I as a lender adopt a position with one borrower, that can certainly bind me in dealing with other borrowers. Too many [...]
Doing business with the government comes with the territory in affordable housing – because it always costs money to fill the cost-value gap, and government is the ultimate source of evergreen, scalable subsidy resources – which raises an eternal question: how do you hedge government-performance risk? Theoretically, one can sue the government, and [...]
By: David A. Smith [Continued from yesterday's Part 1]. Yesterday’s post dismantled a slightly fear-mongering Wall Street Journal suggesting that FHA’s net worth would fall below the statutorily mandated 2%, and if so, that FHA would need a ‘bailout.’ In fact it does seem that FHA’s portfolio is under stress, with delinquencies up [...]
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