Mortgage Rates and Kissing Fannie and Freddie Goodbye

Lately for work I've been writing about the fiscal announcements Obama's been making, like the plan to wind down Fannie Mae and Freddie Mac and the budget announcement. And maybe it's just from being in Washington, but I think it's kind of interesting to talk about, so I thought maybe this Conversation Topic Tuesday could cover what the president and Congress are doing with tax dollars. (I really don't mean for this to be taking political sides; really just a discussion of what happens to be going on.)

Fannie Mae and Freddie Mac:

• These are names we hear a lot. In case you're looking for a little background on what they do, here's how it goes: Banks give people loans to buy houses. However, these loans are usually very long term (say, 30 years) and in the U.S. the way it works is you lock in an interest rate when you sign up for a mortgage loan. If the rates go down, you can refinance to get the lower rate. But if rates go up, there's not much banks can do to charge you more. So this makes banks not like these loans because it creates risk for them. However, the U.S. government steps in to encourage banks to make 30-year fixed-rate mortgage loans by having Fannie Mae and Freddie Mac come in and buy loans off of the banks. Fannie and Freddie then repackage those loans and sell them to investors, who make money on them when people pay off their mortgage and lose money if people don't. The thing about Fannie and Freddie is, they've been kind of guaranteed by the government, so when too many people were not paying their mortgages a couple years ago and Fannie and Freddie were about to go bankrupt, the government steeped in with a whole lot of money and kept them afloat.
• The fact that Fannie and Freddie currently back more than 90% of the mortgages that are being made right now makes it pretty obvious why the government stepped in; if they hadn't, the housing market would have come to a complete and utter standstill and no one would be able to get a loan and people would have lost even more money on their homes, which would have caused the economy to tank further and more people would have lost their jobs.
• However, the fact that Fannie and Freddie are backing more than 90% of mortgages also makes it really clear that the government needs to find a way out of this, because mortgage making is not the government's job. For once, both Democrats and Republicans have decided they can agree on this, but since if the president were to put out one plan for how to solve the problem, Republicans would just shoot it down, he proposed three plans and now people can talk about them until they find a consensus.
• No matter what happens, Fannie and Freddie are going to be history in ten years or less. The president's plan is to sell off their assets over the next ten years. Tim Geithner was saying five to seven years. The point is, they won't be around a decade from now.
• Obama has put forward three possibilities for what could replace them
• Under the first plan, the government would pretty much pull out of home financing, but would retain some presence, focusing only on low- to moderate-income level and very credit worthy borrowers. This sounds really great. The only trouble is that we would pretty much have to kiss the 30-year fixed-rate mortgage goodbye and mortgages would be more expensive. However, taxpayers wouldn't be on the hook if things headed south again.
• Under the second plan, the government would focus mostly on low- to moderate-income, credit worthy borrowers, but would also include a government backstop that could "scale up" (as the report to Congress put it) to provide more financing when the economy tanks and banks don't want to lend. However, 30-year fixed rates will still get more expensive.
• Under the third plan, the government would again offer mortgage-backed securities just fewer of them and there would be very tight oversight. Thirty-year fixed rates will be more expensive, but less so. However, tax payers will be more on the hook.
• The thing is, as much as people talk about getting the government out of financing mortgages, if push comes to shove, if the economy tanks as bad as it has recently, the government will step in. So realistic lawmakers kind of have to add that into the mix, too.
• To sort of sum things up, the government is going to be withdrawing from home financing. How dramatic that withdraw will be remains to be seen. Loan prices will go up, which may sound like a bad thing, but there are positives, too: As we've seen, when anyone and everyone can get a home loan, prices go up like crazy. So even though financing is going to get harder and a bit more expensive to come by, that will also mean that builders and home sellers won't be able to charge as much for their homes because people won't be able to get approved for as much, and that will hopefully help keep home prices tethered to earth. So there are pros and cons both ways.

Ok, it's bed time. I think this will have to be a two-part series and we'll cover Obama's budget tomorrow.

I Love You, Tube!

I don't know about you, but I've kind of fallen in love again with watching dumb videos online. If you haven't seen these yet, you really need to:

Josh Groban Sings Kanye West Tweets

Bad News

AutoTune the News Episode 5

Happy Valentine's Day!

Hey, John!

... so much.

________________________________________________________

When John saw this he looked worried.

John: "Oh...I love it."
Claire: "Why did you hesistate like that."
John: "Well...it looks like you're saying you like sheep butts."
Claire: "It's a ewe!!"

Stupid Valentine's Day.

H is for Happy!

What better way to start gearing up for Valentine's Day than with a bridal shower. Especially when it's for someone I and everyone else adores so much.

My dear, dear friend H is getting married to a wonderful guy. And since H's closet is a rainbow of the most unique and fantastic pieces of clothing and she weilds them with awe-stricking prefection mixed with reckless abandon, we decided to go with lots of color.

Starting with the invitations:

(John, through some diligent YouTube searching and a few phone calls, figured out how to make our own letter-press plates. A post on that coming soon.)

Then with some watercolored flags (we used canvas paper to keep them from wrinkling when they were saturated with watercolor):

Then we made this sign by repuposing the frame from the necklace organizer and adding some words formed in 12-guadge wire (John explained that it's the same wire people use when forming things with concrete; so next time you're making your concrete slabs, just squirel some of that wire away for crafts), which we wrapped in yarn/crepe paper streamers.

And H's roommate M did the most incredible job with the loveliest fruit pizza's and other colorful fare  I've ever seen:

Including a vegetable portrait of the bride:

Looks just like her, right?

You're lovely, H. So happy for you.

If Music Be the Food of Love

I'm not used to being in a relationship over Valentine's Day, let alone being married. I'm kind of stressed out about this and not really sure what to do.

But thinking about it has reminded me of the party my roommates, John, and I threw for Valentine's last year under the theme "If music be the food of love, play on." (W. Shakespeare) It was maybe the greatest thing to ever happen to me.

I made big paper flowers out of old sheet music from the thrift store and plain red tissue paper (sorry all the photos are dark; candlelight kind of killed the photo opt):

And we strung Christmas lights around the banister and ran them along the wall, then covered the whole thing with pages we ripped out of a book of Shakespearean love sonnets:

But the best part was our crazy talented friends who played their musical instruments for us.

The ever-fabulous B played her cello. (Find her ever-fabulous blog here.)

When I lived in this house before I got married, we kept a guitar on hand just to hear T play when he came over. (He's single, ladies.)

J played that ukulele like a rock star that night. Who plays the ukulele?

And we finished with a sing-a-long to "I'm the one who wants to be with you." 

Way to get into the music, Steph.

John and our friend Melanie found these fantastic champagne flutes for $0.25 each at Ikea!

And I knew I wanted to marry John when he engineered a way to get heart shapes made out of sugar onto the cupcakes.

This is going to be a weak Tuesday post. It's been a crazy day. Sorry about the lack of decorations. Most crafty time has been going into getting ready for a bridal shower this Saturday, so once that has happened, there will be lots of post-party how-tos. Until then, here is one of my favorite things of all time: 

We’re Going to Party Like It’s 1929

By ALEX WILLIAMS

Published: November 30, 2008

An event planner delivers a "winter wonderland" from the 99-cent store.

Sports Muckraking, Vol. 1

In a 1955 interview with Walter Cronkite, Sam Huff, a New York Giants linebacker summed up the strategy behind the sport: "We try to hurt everybody."

It's not a big surprise. We know it's about injuries as well as NFL insiders, and everyone just accepts it. Buzz Bissinger, author of Friday Night Lights, wrote in his column "The Daily Beast" that "violence is not only embedded in football; it is the very celebration of it. It is why we like it. Take it away, continue efforts to curtail the savagery, and the game will be nothing, regardless of age or skill." But if we look at the NFL's history of attempts at making the game more civilized, fans will quickly realize they have nothing to worry about. As players' face protection has gone up, they've also learned to tackle with their heads instead of their arms. In 1970, the average weight of an offensive tackle was 260 lbs; in 2006 that number was 314. Last year James Harrison, linebacker for the Steelers stated his understanding of the game: "I try to hurt people." In more than 50 years, nothing has changed.

I hesitated before writing on this for Conversation Topic Tuesday for a while. But it's something that affects the safety of citizens of every age and in almost every town in the nation.

So here are a few talking points:

• A 2009 study conducted by the University of Michigan's Institute for Social Research reported that former NFL players are 19 times more likely to develop Alzheimer's disease or similar memory-related diseases than a normal man between the ages of 30 and 49.
• Alan Schwarz of The New York Times reports that the only helmet standard to have been written was put together by the National Operating Committee on Standards for Athletic Equipment--a volunteer consortium that receives a large part of its financial backing from the helmet manufacturers. This standard has not changed since 1973, even as concussion rates in youth football have risen.
• Chronic traumatic encephalopathy (CTE), a condition experts believe results from both large collisions and the accumulation of small collisions (such as those sustained in football practice but not large enough to be recognized as dangerous) has been known to develop as young as 21 years old. Since CTE can only be diagnosed through autopsy, it is unclear how many football players suffer from the disease. However, Christopher Nowinski, a concussion expert, told The New Yorker that a prediction of 20 percent of NFL players having CTE seemed conservative.
• According to the National Center for Catastrophic Injury research, between 1982 and 2009, 295 fatalities resulted either directly or indirectly from high school football.
• The New York Times reports that "more than 100,000 children are wearing helmets too old to provide adequate protection — and perhaps half a million more are wearing potentially unsafe helmets that require critical examination, according to interviews with experts and industry data."

Perhaps more easy to digest are the human stories:

• The first diagnosis of CTE was made on the brain of Mike Webster, former center for the Pittsburgh Steelers, who died homeless living out of a truck.
• The second diagnosis of CTE was made on ex-Steeler offensive lineman Terry Long, who killed himself drinking antifreeze.
• CTE was also diagnosed in Justin Strzelczyk, who died when his car hit a tanker truck after he drove the wrong way down the New York Thruway. 
• Ted Johnson, a retired New England Patriots linebacker, was 34 years old when he began locking himself in his apartment with the blinds drawn for days at a time. His neurologist told him he was already showing early signs of Alzheimer's disease.
• Markus Koch, retired defensive lineman for the Washington Redskins, can't stand for too long or his legs go numb. He suffers from depression and is sometimes unable to leave his bed for long periods of time.

The evidence goes on and on and on. The more I've thought about it, the more the differences between football and the Roman spectacle begin to disappear. Except in the American version, by the time the athlete is defeated, all the crowds have left him to suffer alone.

(Sources: The New Yorker, The New York Times)