Posted on 11/11/2008 6:54:15 AM PST by marshmallow
Fannie Mae said Monday that it might need more than the $100 billion that the Treasury said it was willing to invest in the giant mortgage company to help it stay in business.
“If we continue to experience substantial losses in future periods or to the extent that we experience a liquidity crisis that prevents us from accessing the unsecured debt markets, this commitment may not be sufficient to keep us in solvent condition or from being placed into receivership,” Fannie Mae said in a filing with the Securities and Exchange Commission.
Fannie Mae reported earlier Monday that it lost $29 billion in the third quarter. It said the number of loans in its portfolio that were in foreclosure or delinquent by more than three months had jumped to 1.72 percent in September.
The mortgage company said in its S.E.C. filing that it had a limited ability to issue debt maturing past one year, citing market conditions, the lack of an explicit federal guarantee and competition from government-insured bank bonds.
“Treasury may end up putting far more than $100 billion into these entities, especially if the housing market continues to decline,” Rajiv Setia, a fixed-income analyst at Barclays Capital, told Bloomberg News. “There’s just no way, no way” Fannie and Freddie will emerge from conservatorship within the next two to three years, he said.
(Excerpt) Read more at dealbook.blogs.nytimes.com ...
$150 billion for AIG........$100 billion for Fannie. Automakers next in line.
The bailout is starting to look a little strained.
A trillion here, a trillion there, and pretty soon you’re talking about real money!.........
If we’re moving back to a climate of responsible lending to those that are qualified to purchase a home, we should let Fannie Mae vanish.
Reparations-Part XXIII
I think this situation needs a Texas Trouble Shooter, i.e., someone who finds out who’s causing the trouble and shoots ‘em.
educate me here...will congress have to vote on THIS additional bail-out?
Let ‘em fall, business empires always rise and fall. Fannie Mae shouldn’t be treated differently.
NO MORE BAILOUTS !!!!
PERIOD !
This is the fastest way to end the Democrats’ rule cause they can’t stop the bailouts.
If Fannie Mae needs money, they can start by taking back what they gave to the likes of Jamie Goerlick and Franklin Raines.
Fannie Mae CEO Franklin Raines Letter to Shareholders----2003 Fannie Mae Annual Report
Excerpt ...Ten years ago......the typical conforming mortgage required a down payment of 10 to 20 percent, and low-down payment mortgages were considered too risky. But then we helped to standardize the 3 to 5 percent down payment loan, brought it to global capital markets, and made it available to lenders and communities nationwide. Now low-down payment loans are commonplace. And we just adopted a new variance in our underwriting standards that will make the $500 down payment loan widely available as well...
In 1994, we pledged to provide $1 trillion in capital to ten million underserved families by the end of 2000. Thanks to our housing and industry partners, we met that goal early.
Then in 2000, we launched our American Dream Commitment, a pledge to provide $2 trillion in capital to 18 million underserved families by the year 2010, including $400 billion targeted specifically for minority families (later raised to $700 billion in response to President Bush’s Minority Homeownership Initiative). After four of the strongest years in housing and mortgage finance history, we’ve already surpassed the top-line goals of this commitment. But our work is far from complete.
So in January 2004, we announced our Expanded American Dream Commitment and pledged significant new resources to tackle America’s toughest housing challenges. Our new commitment has three main goals.
First, we will expand access to homeownership for six million first-time home buyers in the next ten years, including 1.8 million minority first-time home buyers.We also will help raise the national minority homeownership rate from 49 percent to 55 percent, with the ultimate goal of closing it entirely.
Second, we will help new and long-term homeowners stay in their homes through a series of initiatives, and commit $15 billion to preserve affordable rental housing and $1.5 billion to support the revitalization of public housing communities.
Third, we will increase the supply of affordable housing and support community development activities in at least 1,000 neighborhoods across the country through our American Communities Fund, and through targeted investments like Low-Income Housing Tax Credits that help finance affordable rental housing.
It is because of initiatives like our Trillion Dollar Commitment and our American Dream Commitment that we have exceeded our HUD affordable housing goals for ten consecutive years.
==========================================
December 28, 2004
RAINES' FAREWELL: $26M+
By PAUL THARP NYP
http://www.nypost.com/business/37312.htm
Although Fannie Mae chief Franklin Raines was fired for bungling its books, he'll get a $26 million parachute — not counting a monthly pension of $116,300 for life. The 55-year-old Washington, D.C. insider and his CFO J. Timothy Howard left their jobs last week under a cloud of suspicion that the execs undermined the financial soundness of Fannie Mae, creating losses of up to $9 billion.
Regulators overseeing Fannie Mae urged it not to pay any benefits to either executive until reviews are made of their contracts, filings said yesterday. Fannie Mae's filings federal Raines owns options giving him $5.8 million in net profit after redeeming them, plus another $8.7 million in deferred compensation for his six years at the helm.
Raines has already collected $4.87 million in special performance shares this year and also keeps $5 million of paid-up life insurance. He and his spouse get free medical and dental benefits for life, worth over $1 million.
Last year, Raines earned $20 million in salary, bonuses and stock awards. The Securities and Exchange Commission said he broke accounting rules by playing with risky derivatives. After he was fired, Raines told the board that he's entitled to get paychecks until next June 22 giving him another $600,000, which triggers a $2,000 monthly raise in his lifetime pension.
He also says he's entitled to disputed options with a gross value of about $5.6 million. To keep Raines happy within philanthropic circles, Fannie Mae will match his charitable contributions by $10,000 a year.
Raines' CFO Howard gets a parachute valued at more than $13.1 million — not including a monthly pension of $36,071 for life. Howard gets free medical and dental coverage for himself and family for life, and as well as the matching $10,000 annual perk in making charitable contributions.
I think Fannie Mae and Freddie Mac should be transferred to Guido and his palls. This will ensure a lesser rate of defaults.
Well, they certainly won’t survive with just the numerous church youth groups selling their candy....
Oh, ^that^ Fannie Mae....never mind.
Something doesn’t sound right here. Bad loans rose to 1.72 percent. That means that 98.28 percent of the paper is OK.
How can such a small percentage trigger such losses?
A ‘Bottomless Pit’
A ‘Black Hole’
for which Congress is rushing to the rescue.
Congress can not turn their backs on giving away OPM!
This is what I don't understand. When Bernanke was testifying about the bailout, he noted that the total amount came to about 5% of the total mortgage value in place. There was a thread some time back that noted that the entire subprime mortgage market is a small fraction of the total mortgage market. Rush Limbaugh was talking the other day about how of even the small fraction of the total represented by subprime mortgages, only a fraction of those subprime mortgages have actually failed. Most of the mortgages are still good, people like me paying on time every month, year after year.
If there percentages are truly small, how can it drag down the entire industry, and in turn drag down the entire economy? And I don't buy the "leveraging" argument. Nothing can be leveraged that much so as to drag down an economy so large and diverse. And I know about the marked-to-market smoke and mirrors. Even with that, if you've got reliable accounts receivable, even if the assets have deteriorated on paper, your revenue stream should still be viable.
So either the percentages of bad loans is higher than we've been told, or there is some other monkey business going on here. It just doesn't add up.
I think Fanny Mae needs to be turned over the the Italian Mafia, mortgage defaults will diminish rather quickly.
fannie didn’t do anything with the first money they got. its now working and sure not helping.
How many illegal immigrants had their homes repossessed after taking out Fannie Mae/ Freddie Mac loans given to them by Democrats, when they couldn’t afford a loan in the first place, and then signed up with ACORN to vote for Democrat Barack Obama???
Please sign this petition against Obama requiring proof of American citizen to hold office as the President:
http://www.rallycongress.com/constitutional-qualification/1244
This does not end until the FED allows home values to FALL to supportable levels. “Mark-to-market” is killing EVERYBODY right now, bailout or no, because NO ONE really knows what these assets are really worth.
All we are doing now is throwing good money after bad, and the Dems have already pocketed thier hundreds of millions from this mess.
That hardly sounds like the great depression is upon us. Apparently it doesn't take much to drag the whole mortgage industry down. That means that all of our mortgages are now at risk of a great depression for the opportunity to sprinkle around "affordable housing" thinking that the risk would be spread adequately and that by ignoring market forces more people could own homes.
One other observation. If this isn't close to the bottom then we are really in for it.
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