Hat tip to ZeroHedge for the link and the analysis.  Further hat tip to twist for sober second thoughts and debunkers (following — looks like capitulation is still a go ):

CalculatedRisk (8/5 ’10): “Nonsense Rumor on Fannie and Freddie”

Reuters grownups (8/5 ’10): “U.S. Treasury- no change to Fannie, Freddie policy”

Millions of American homeowners have now realized that it’s a bit pointless to keep manning the pumps when there’s no prospect in the medium term that the gunnel’s going to rise above the waterline again.

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UPDATE (6/8 ’10): Hello! … (hat tip twist for the link)

HUD.GOV (6/8 ’10): “FHA LAUNCHES SHORT REFI OPPORTUNITY FOR UNDERWATER HOMEOWNERS”

Effort designed to encourage principal write-downs for responsible borrowers

On the other hand, Bill McBride is still sticking to his guns.

Calculated Risk (8/6 ’10): “FHA Refinance of Borrowers in Negative Equity Positions”

Note: this has nothing to do with that nonsense rumor yesterday about a government principal reduction program. This was previously announced in March.

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This looks like a plan to encourage those Americans to keep making at least a reduced payment on their mortgages while markets heal, although the additional costs (in the form of increased Treasury subsidies laundered through Fannie and Freddie) will be adding strain to other parts of the system.

Reuters (8/5 ’10): “An August Surprise from Obama?”

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth.

Underwater rescue is a whole different ball game.

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