MORTGAGE = USA!

(Newser) - A tax break introduced by President Clinton and made law in 1997 helped fuel the housing bubble that eventually led to the current economic crisis, the New York Times reports. The cut, which allowed owners to sell their homes without paying capital-gains taxes on profits up to $500,000, created an incentive to pump money into housing rather than other, taxed investment instruments. More »

(Newser) - Reverse mortgages—which allow older homeowners to borrow against their equity without paying it back, as long as they live in the home—have risen in popularity since the federal government raised the limit on borrowing, the Seattle Times reports. The old ceiling for owners 62 and up was about $352,000; the new one, $417,000. More »

(Newser) - With unemployment rising, salaries stagnant, and housing prices cratering, many unhappy couples are opting not to divorce, reports MSNBC. “A lot of people are deciding, 'It’s not worth it to do it (at) this time. Let’s stay together. Let’s try to work through our problems and hope that the economy will spring back,’” one Miami lawyer says. More »

(Newser) - Saving people's homes from bank foreclosures will be a priority of his economic crisis plan, President-elect Obama said in an interview airing tonight on 60 Minutes. "We've got to set up a negotiation between banks and borrowers so that people can stay in their homes. That is going to have an impact on the economy as a whole," Obama said in comments obtained early by the New York Daily News .   More »

(Newser) - Fannie Mae lost more in the third quarter of this year than it gained from soaring house prices between all of 2002 and 2006, the New York Times reports. The massive $29 billion loss, mainly from asset writedowns, means the company may need more than the $100 billion pledged from the government to stay afloat. Experts believe the results could also signal a prolonged fall in house prices. More »

(Newser) - European leaders hoped to emerge today from a meeting in Paris with a detailed unified action plan to address the continuing worldwide economic crisis, Reuters reports. Banks continued to hold emergency talks today with officials in the British government, which is about to purchase major equity stakes in the nation's largest institutions. Australia and New Zealand officials announced the government would guarantee all bank deposits. More »

(Newser) - If a $700 billion federal bailout sounds like a lot, it is—but Washington will actually shell out $1 trillion in all of its present and proposed plans. Between Henry Paulson's plan, and bailouts of Bear Stearns, AIG, and Fannie Mae and Freddie Mac, the Wall Street Journal breaks down Washington's rescues into pieces to see how much of it will hit taxpayers' wallets. More »

(Newser) - The Treasury’s rescue plan for Fannie Mae and Freddie Mac may be “superbly crafted,” Steven Rattner writes in the Washington Post , but it won’t solve the government-sponsored entities’ problems. Continuing as private-sector enterprises is a setup that “simply doesn’t work.” The GSEs had every incentive to abuse their government backing to profit private shareholders—and they did. More »

(Newser) - What Freddie Mac and Fannie Mae look like in the future—and whether they continue to exist in a recognizable form at all—depends on how Washington looks next year, the New York Times reports. The battle already has begun, with the White House and congressional Democrats blaming each other for the collapse of the mortgage giants, even as Treasury officials push their own plan. More »

(Newser) - US stocks rallied as traders bet the bailout of Fannie Mae and Freddie Mac would help the economy recover, but lost some of those gains—with the Nasdaq even flirting with losses—as the day wore on, MarketWatch reports. Nonetheless, the Dow gained 289.78, closing at 11,510.74. The Nasdaq closed up 13.88, at 2,269.76, while the S&P 500 rose 25.48 to finish at 1,267.79. More »

(Newser) - Jim Cramer has spent over a year “shouting in my usual unhinged way” about the bleak real estate market, he writes in New York. But now he’s so confident housing’s headed for a bottom that he’ll name the exact date: June 30, 2009. Why? New home construction has fallen spectacularly, and "by next June we won’t be building enough homes to accommodate demand." Congress has authorized $300 billion in FHA loans. Foreclosures and supply will both nosedive as a result. More »

(AP) - Stocks surged this morning as investors rushed to lay bets on a broad economic recovery following the weekend announcement that the US government will bail out mortgage lenders Fannie Mae and Freddie Mac. The major indices jumped, with the Dow Jones industrials gaining more than 300 points. Meanwhile, bond prices fell sharply as emboldened investors looked for riskier but higher-yielding bets. More »

(Newser) - How will the government’s seizure of Fannie Mae and Freddie Mac affect homeowners and buyers? In the short term, the New York Times says, interest rates may fall some, but probably not enough to stop the slide in home prices. Some facing foreclosure could have a better chance at refinancing, if the feds decide to offer more incentives—or pressure—to companies holding troubled mortgages. More »