Showing posts with label Freddie Mac. Show all posts
Showing posts with label Freddie Mac. Show all posts
Thursday, February 17, 2011
Winding down Fannie & Freddie
I don't usually quote a Catholic website for financial news(see last post), but it seems that while everyone is obsessed with things in the Middle East and the big budget fight in DC, Geithner and friends are making some vague plans for a huge bailout of the mortgage giants Fannie Mae and Freddie Mac. This was news last fall, but I haven't heard much more since then. Geithner's Salt Lake City line is the highlight of the video. See you in Salt Lake, if we make it that far...
Fannie Mae & Freddie Mac Bailout Costs Skyrocket to $153 Billion to start
The federal bailout of Fannie Mae and Freddie Mac is emerging as the priciest government rescue of the financial crisis, as it already stands at $153 billion and counting. Even as the current administration unveiled its plan for reforming the firms, experts agree taxpayer losses are going to continue to climb regardless.
The Federal Housing Finance Agency, the government body that oversees the two mortgage giants, estimates losses through 2013 will require the Treasury to add another $68 billion to $210 billion into the firms on top of the money already used to prop-up the firms and the housing market.
"Regardless of what they do, even if they were to change their status tomorrow, none of that will change the losses that will be coming due on their existing book of business," Guy Cecala, publisher of Inside Mortgage Finance says.
Both firms have already made many improvements in underwriting standards over the last two years, making most new loans they finance and guarantee more profitable and less risky, Cecala says.
"But that new business only goes so far, because it's still dwarfed by the loans made five to 10 years ago," he said.
Cecala thinks the losses may end up coming in a bit below FHFA's estimates, but other experts believe those estimates may be too conservative.
"The losses depend very much on housing prices, and I don't see the situation in the housing market getting very much better," Peter Wallison, senior fellow at the American Enterprise Institute, a conservative think tank says.
"As long as home prices continue to decline or even stay the same, the losses to Fannie and Freddie, and to the taxpayers, will continue to climb."
from: (Catholic Online)
The Federal Housing Finance Agency, the government body that oversees the two mortgage giants, estimates losses through 2013 will require the Treasury to add another $68 billion to $210 billion into the firms on top of the money already used to prop-up the firms and the housing market.
"Regardless of what they do, even if they were to change their status tomorrow, none of that will change the losses that will be coming due on their existing book of business," Guy Cecala, publisher of Inside Mortgage Finance says.
Both firms have already made many improvements in underwriting standards over the last two years, making most new loans they finance and guarantee more profitable and less risky, Cecala says.
"But that new business only goes so far, because it's still dwarfed by the loans made five to 10 years ago," he said.
Cecala thinks the losses may end up coming in a bit below FHFA's estimates, but other experts believe those estimates may be too conservative.
"The losses depend very much on housing prices, and I don't see the situation in the housing market getting very much better," Peter Wallison, senior fellow at the American Enterprise Institute, a conservative think tank says.
"As long as home prices continue to decline or even stay the same, the losses to Fannie and Freddie, and to the taxpayers, will continue to climb."
from: (Catholic Online)
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