Obama- Not Sure I Understand

[Jake Kucheck]

"Right now, Fannie Mae and Freddie Mac -- the institutions that guarantee home loans for millions of middle-class families -- are generally not permitted to guarantee refinancing for mortgages valued at more than 80 percent of the home's worth. So families who are underwater -- or close to being underwater -- cannot turn to these lending institutions for help.

My plan changes that by removing this restriction on Fannie and Freddie so that they can refinance mortgages they already own or guarantee. This will allow millions of families stuck with loans at a higher rate to refinance. And the estimated cost to taxpayers would be roughly zero; while Fannie and Freddie would receive less money in payments, this would be balanced out by a reduction in defaults and foreclosures."

His plan is removing equity protection against downside risk for GSE guaranteed mortgages? Am I missing something? We have a problem that stems from lots of properties being over-encumbered, so the answer is to... ensure that the properties stay over-encumbered? Does he really expect 150% LTV loans to get funded? At below market interest???

Somebody tell me I'm just confused and this isn't really his plan... I really, really hope thats the case.