US Fed take control of Fannie and Freddie - Extraordinary Takeover

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Real Estate Agent with Windermere Real Estate - Palm Springs CalBRE# 01339266

Confirming that the Mortgage Crises is far from over, Federal officials unveiled an extraordinary takeover on Sunday of troubled mortgage giants Fannie Mae and Freddie Mac, signaling the most dramatic move to date aimed at shoring up the nation's housing market - CNN Money

Under conservatorship, the government would temporarily run Fannie and Freddie until they are on stronger footing. "We examined all options available, and determined that this comprehensive and complementary set of actions best meets our three objectives of market stability, mortgage availability and taxpayer protection," Paulson said. "The move is intended to prevent major financial turmoil. Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner on housing."

Fannie and Freddie's loans will be managed by the Federal Housing Finance Agency.

Fannie's stock price has fallen about 66% since the end of June 2008 and Freddie has fallen about 69% in the same period. Chief Executives of Fannie and Freddie, Richard Syron and Daniel Mudd have been ousted as part of the takeover.

To highlight how drastic the deterioration of these companies really is, take a look at their capital: Fannie had $47 billion at June 30, according to company filings (They are required to hold $37.5 billion). Freddie's capital stood at $37.1 billion (compared with a requirement of $34.5 billion). Fannie's market capitalization is now $7.6 billion - down from $38.9 billion at the end of last year while Freddie's has fallen to $3.3 billion, down from $22 billion over the same period.

Fannie and Freddie own or guarantee almost half of the $12 trillion in U.S. home loans and the government had been leaning on the companies to help pull the economy out of the housing crisis.

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Topic:
Mortgage / Finance
Location:
California Los Angeles County West Hollywood
Groups:
ABR-Accredited Buyer Representatives
Condo Specialists
Real Estate Professionals
Realtors®
Wake Up Brokers
Tags:
mortgage crises
interest rates
inflation
finance
los angeles real estate
west hollywood

Comments 10 New Comment

Rainmaker
223,224
Nancy Larson
American Dream Referrals

We shall see. I just can't wait to go to work Monday for the emails. What concerns me the most, is what will I be able to offer the consumer.

September 07, 2008 11:21 AM
Rainmaker
66,092
Edward moloney
Loan Officer Providing 5 STAR SERVICE
Edward Moloney Loan Officer GMH Mortgage Services

My thought is business will stay the same. Keep in mind the goverment runs FHA programs and USDA programs

September 07, 2008 11:24 AM
Rainer
31,338
Scott M. Stulich
See What Moves You!!
Re/Max Leading Edge

NOT GOOD I AGREE.....................................

September 07, 2008 11:25 AM
Rainmaker
137,026
Aida Pinto
Real Estate Broker (562) 916-3237
United Associated Brokers

Nancy--you hit the nail on the head: "what will I be able to offer the consumer." 

September 07, 2008 11:25 AM
Rainer
129,765
Rich Dansereau
Positive Real Estate Professionals

I am disgusted by this bailout! The federal government will bail out two of the central players that ushered in this debacle. They determined the guidelines and accepted the risk and now they need bailed out. I really am amazed that the government will bail out these companies and not help the homeowners. The government's claim that they might get all, some or none of their bailout money back is a pipedream; once loaned that money is down the rabbit hole. The money belongs to the taxpayers, help the taxpayers. This won't stabilize the market, that assertion is a red herring. Sorry for the rant but this decision and the misleading reasons for it really anger me.

September 08, 2008 10:47 PM
Rainmaker
473,563

Palm Springs Realtor Stewart Penn

Windermere Real Estate - Associate Broker
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