More Hot Air From the White House

Is the White House finally getting serious about helping underwater homeowners refinance their mortgages?

Not judging by the bond market.

Yesterday, mortgage-backed securities issued by Fannie Mae and Freddie Mac jumped in price.

Given how refinancing affects these bonds — borrowers who re-finance pay off their expensive loans, reducing investors’ return — the price jump reflects skepticism that large numbers of homeowners will actually refinance in response to the White House’s latest push.

“There was a big fear that you’d see a big rise in prepayments, and, based on what [Fannie Mae and Freddie Mac] said, that has receded.  It doesn’t look like they’ve done anything big here.”

–Todd Abraham, co-head of the government-and mortgage-bond group at Federated Investors in Pittsburgh; The Wall Street Journal (11/17/2011)

So, there you have it.

Don’t listen to what the White House says.

Watch what the bond market does.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply