You're watching...
WSJ reporter Nick Timiraos and Edward Pinto, former chief credit officer at Fannie Mae, on the Obama Administration's upcoming plans to turn foreclosu...
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Properties the Wall Street Journal -- ten euros wrote about it in today's Paper He joins us now along with Edward -- -- He's a former Fannie Mae chief credit officer in our resident scholar at the American Enterprise Institute in a consultant for the mortgage industry and someone with a very long business card also -- -- -- you and it second but nick them.
Right after the top the government thinking about becoming our land learned that at first blush this seems a little bit complicated and I'm a little bit skeptical but -- this walk us through this.
What what that what the Obama administration is doing today as they're asking their private sector for ideas that on what you might do -- hundreds of thousands of foreclosed properties.
The Fannie Mae and Freddie Mac either own today but -- gonna on at some point down the road because you have so many borrowers and for closure.
And foreclosures are driving prices down and a lot of markets undermining the recovery.
For the housing market at a time when rents are going up so already you've seen a private sector investors buying up homes and renting them out.
And the government -- -- saying look could be maybe kill a couple of birds with one stone.
By taking these properties off the market selling them to investors who agreed around the now.
And does -- it's -- -- added we have had a right here.
Bet now underway very very nervous about the government getting involved in private enterprise.
You know it's they've already pick the winners in the automobile industry in other industries.
The notion that they want to do this to me has political overtones to it what's your opinion on this.
I agree with you I remember how we got into this mess the government decided that homeownership was the goal and it push that two and on sustainable level.
Did away with down payments and now we're turning around and gonna say turning into rentals.
I think if the government takes these properties cells into the private sector.
And then -- the private sector do what they want to do with them.
Try to make us some money.
Rent the properties out do.
Rent to own whatever this act private sectors side.
That's fine if the government is going to run this program.
And keep track of these -- and try to run as a social policy program I think the -- back into the same problems that got us in here in the first.
Let's naked doesn't seem like that's what the government is trying to deal with trying to get outside parties outside investors to come and take during the burden off their hands and then they end up managing the properties at least from what I read from your article.
That's right I think the government policy makers have very little interest in being the lamb or they realize there are a lot of risks a lot of dangers getting into that business.
And they frankly don't want that there is some talk about where they maintain a state.
In the investment so the taxpayers would benefit.
If these homes sold at higher prices in five years.
They would collect some of that -- -- -- the same way the FDIC structures or lost share deals on failed assets when they take over banks but really I don't think.
We're gonna see the government get -- landlord business here the idea is that.
We're undermining the house recovery when we -- all these foreclosures out there in the third somewhere we could bring the private sector to bear to avoid having to keep doing that.
Bubba -- here's the counter argument that the government has done a lot they've put in billions of dollars has been all kinds of programs to help people buy -- house -- -- house.
-- -- negotiate and it's actually been worse it actually has just been nothing more than speed bumps into the eventual bottom.
For closing a lot of people would tell you it's part of the park a part of the process in other words until we've -- everyone out we're never gonna truly get to -- bottom.
You can never have a -- rebound well we need to clear through these foreclosures I absolutely agree but I think you can really do a lot more damage.
If you're just putting these foreclosures on the market when there aren't buyers and and so a lot of places like Phoenix and Las Vegas.
There are -- organic buyers right now to soak up these homes that were already selling them to investors and if I have a deal to sell my house for 200000 dollars to but there's a foreclosure down the street for 150 and you've already agreed to pay me 200000 dollars for that house.
Well foreclosures gonna lead to a distressed appraisal and the bankers and then went on my property of the 200000.
That you've agreed to give me and so that's what's happening right now and lot of housing markets is the foreclosures are actually.
Exacerbating the downturn.
And this is -- -- think it their there is some sense in trying to do something about it.
And before we let you go having been inside Fannie Mae yourself is there any other options that we haven't talked about that we haven't considered.
Besides this new program put on the table that we should be talking about.
Now I I think we've kind of reached the end of -- you know a lot of the policy options this rental option is that a variant of it which tried a year and a half two years ago is it was somewhat different.
These programs take a long time to develop.
Put in that place and then actually have something happen in.
I think we've seen the expectations get raised and it it just ends up being as much smaller program for a lot of -- -- complicated.
I do I do agree that if they can take these properties and move them in mass.
Into the private sector.
That and and avoid.
The foreclosure sales.
That.
Any Dario sale process.
That's a good way to do it but the government has to then cut the strings and let the private sector.
Move forward.
Naked Ed thank you both very much for being with us today.
My pleasure thank you thank well stocks they didn't work closing earlier today -- 200 these days --
