Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Bust In Nation's Housing Sector Could Hit Freddie, Fannie Hard
Investors Business Daily ^ | 10/13/205 | Laura Mandaro

Posted on 10/14/2005 7:08:08 AM PDT by ex-Texan

If the housing market sputters, it's not just individual homeowners who will feel the jolt.

The legion of financial institutions that own mortgages will also get rattled.

Banks, thrifts and credit union lenders now hold only one-third of the $8.5 trillion in single-family mortgage debt outstanding. That's down from 44% in 1989 * * *

In the place of traditional lenders, government-chartered mortgage financers such as Fannie Mae (FNM) and Freddie Mac (FRE) have added volume to their loan books. They've pooled and sold off many of these mortgages to investors in the U.S. and abroad. * * *

And banks' increased reliance on such loans — they hold $2.85 trillion in single-family mortgages vs. $1 trillion in 1989 — means they might not escape a bubble burst unscathed. * * *

What happened to lenders after the last big real estate bubble burst is still fresh in the minds of many who lived through the early 1990s. * * *

Nationally, 1,569 banks and 1,273 thrifts during that period failed, the victims of high interest rates, speculative commercial real estate lending, regulatory changes and local employment shocks.

(Excerpt) Read more at investors.com ...


TOPICS: Business/Economy; Culture/Society; Editorial; Government
KEYWORDS: bubbles; demron; fannie; fanniemae; fnm; housing; realestate
Everybody in Congress knows that Fannie Mae is bankrupt. Freddy may also be hoplessly damaged by "creative accounting" methods. Fannie and Freddy are infected by high corporate perks, excessive salaries and bonuses for executives and golden parachute rewards for the officials that have moved on. (Learn More?) Earier this year, Fannie hired over 15,000 people to beef up their accounting staff. Rumors abound that Fannie Mae is trying desperately to recreate their corporate books and shredders are working over time.
1 posted on 10/14/2005 7:08:13 AM PDT by ex-Texan
[ Post Reply | Private Reply | View Replies]

To: ex-Texan

Weren't most of the Fannie problems Clinton's doing one way or another?


2 posted on 10/14/2005 7:09:51 AM PDT by RockinRight (I am beginning to think conservatism is buried somewhere under New Orleans' mud...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ex-Texan

Sounds like cheap HUD homes to come!


3 posted on 10/14/2005 7:11:03 AM PDT by x5452
[ Post Reply | Private Reply | To 1 | View Replies]

To: ex-Texan

It wouldn't hit me or the 20K or so other people in NOVA waiting for the housing prices to drop very hard at all. Nor would it adversely effect the hundreds of private mortgage lenders that Fannie Mae's fat behind has crowded out of the market.


4 posted on 10/14/2005 7:15:57 AM PDT by .cnI redruM (Because change is not something you talk into existence.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ex-Texan

Fannie Mae has been a wierd ponzi scheme for years. Let it crash!


5 posted on 10/14/2005 7:19:13 AM PDT by agere_contra
[ Post Reply | Private Reply | To 1 | View Replies]

To: RockinRight
Weren't most of the Fannie problems Clinton's doing one way or another?

Yes, but the President has had five years to get it fixed and hasn't brought the problems to light, similar to a wide varieties of Federill agencies.

It's his problem now.

6 posted on 10/14/2005 7:41:49 AM PDT by Carry_Okie (There are people in power who are truly evil.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: agere_contra

Let the private investors take over. We don't need Fannie anyway, plenty of portfolio lenders and subprime lenders out there would gladly take A-paper business at rates comparable to what Fannie can offer.


7 posted on 10/14/2005 7:44:17 AM PDT by RockinRight (I am beginning to think conservatism is buried somewhere under New Orleans' mud...)
[ Post Reply | Private Reply | To 5 | View Replies]

To: .cnI redruM

I know people living in NOVA. One has about 5 acres and a nice three bedroom home and paid about $ 80,000 for the whole shebang last year.


8 posted on 10/14/2005 8:08:52 AM PDT by ex-Texan (Mathew 7:1 through 6)
[ Post Reply | Private Reply | To 4 | View Replies]

To: .cnI redruM; agere_contra

Fannie holds about 2 trillion dollars of debt. Fannie is probably bankrupt but you have to hope that out of the 2 trillion, at least 1.5 trillion is salvageable.

Freddie is probably solvent and is much smaller.


9 posted on 10/14/2005 8:37:50 AM PDT by staytrue
[ Post Reply | Private Reply | To 4 | View Replies]

To: ex-Texan
Show me an add for something like that, and I might buy it. A row of $700,000 condos near where I rent just went over 75% sold and they haven't even finished building it yet.
10 posted on 10/14/2005 8:44:12 AM PDT by .cnI redruM (Because change is not something you talk into existence.)
[ Post Reply | Private Reply | To 8 | View Replies]

To: ex-Texan

Can everyone's memory recall now----S & L Crisis? Yeh, I know, my age is showing.....


11 posted on 10/14/2005 8:45:07 AM PDT by litehaus
[ Post Reply | Private Reply | To 1 | View Replies]

To: ex-Texan
I know people living in NOVA. One has about 5 acres and a nice three bedroom home and paid about $ 80,000 for the whole shebang last year.

Um, you mean $800,000, don't you? I've been doing a lot of shopping for 5 acres in Northern Virginia with a three-bedroom house on the property, preferably a fixer-upper, and I never see anything less than $600K east of the Blue Ridge. If someone told you he bought even a modest townhouse for $80K, he's joking with you.

12 posted on 10/14/2005 8:56:55 AM PDT by Capriole (I don't have any problems that can't be solved by more chocolate or more ammunition.)
[ Post Reply | Private Reply | To 8 | View Replies]

To: Capriole

In should have said Western Virginia. I saw a photo of the house.


13 posted on 10/14/2005 9:04:36 AM PDT by ex-Texan (Mathew 7:1 through 6)
[ Post Reply | Private Reply | To 12 | View Replies]

Comment #14 Removed by Moderator

To: x5452
Sounds like cheap HUD homes to come!

I list and sell over 100 properties a year.

I haven't seen an offer with Government (FHA/VA) financing in almost 4 years.

When conventional lenders are offering 100% financing with "stated income" (not verified), why put yourself in a position to be scrutinized by FHA underwriters?

15 posted on 10/14/2005 9:15:54 AM PDT by DCPatriot ("It aint what you don't know that kills you. It's what you know that aint so" Theodore Sturgeon)
[ Post Reply | Private Reply | To 3 | View Replies]

To: ex-Texan

When the last new bank building is built and the last new church gets built, the economy is going down the tank. Let me know when this happens.


16 posted on 10/14/2005 9:18:49 AM PDT by PeterPrinciple (Seeking the truth here folks.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: DCPatriot

where are you located? i live in upstate ny and see them semi-frequently, usually the price is right anyway but if they end up cash strapped, and with thousands of bad loans prices should get even better.

i don't really care if they verify my income, i actually don't see an advantage to buying something i can't afford.


17 posted on 10/14/2005 9:23:09 AM PDT by x5452
[ Post Reply | Private Reply | To 15 | View Replies]

To: x5452
I am in the Peoples Republic of Maryland in Montgomery County, just north of the Washington, DC line.

Here we have a huge immigrant population.

If you earn income as a landscaper or painter, or house cleaner or babysitter...say $25K a year, you can state that you make for example, $85K per year (as long as your FICA credit score is over 600).

The prohibitedly high monthly payment is offset by having family or friends moving in with you.

Recently sold a 3 bedroom, 1550 sq; ft. condo that has 6 working adults and two children living in it. The $2,100 monthly payment gets paid on time...the bank could care less.

And don't kid yourself...the local government looks the other way. The county police are instructed in no uncertain terms to never request citizen status or cooperate with the immigration authorities in any manner.

18 posted on 10/14/2005 9:34:04 AM PDT by DCPatriot ("It aint what you don't know that kills you. It's what you know that aint so" Theodore Sturgeon)
[ Post Reply | Private Reply | To 17 | View Replies]

To: DCPatriot

enlightening.


19 posted on 10/14/2005 9:39:37 AM PDT by x5452
[ Post Reply | Private Reply | To 18 | View Replies]

To: ex-Texan

That's considerably more believable. The Blue Ridge Mountains are a big dividing line. East of them, the prices accelerate rapidly.


20 posted on 10/14/2005 10:08:42 AM PDT by .cnI redruM (Because change is not something you talk into existence.)
[ Post Reply | Private Reply | To 13 | View Replies]

Comment #21 Removed by Moderator

Comment #22 Removed by Moderator

To: sgribbley

Interesting idea. Thank you.


23 posted on 10/15/2005 8:30:14 AM PDT by .cnI redruM (Because change is not something you talk into existence.)
[ Post Reply | Private Reply | To 22 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson