Tom Lindmark

Do We Want the Government Backing Fannie and Freddie Forever?

I thought of the FDIC angle when I wrote the post and I agree it has parallells. I tend not to be so concerned about the exposure to loss as I do think the proposal can insulate the taxpayer if adhered to as I am the concept of further subsidizing housing. As it is, it receives the largest federal subsidy of all, the tax deductability of mortgage interest.

We've probably relied too much on housing as a driver of the economy for well nigh on 40 years and perhaps it's time to let it stand a bit more on its own two feet and see if investment gets channeled into other sectors.


On Sep 02 08:22 PM Alan Young wrote:

> From my reading of your excerpt, it seems that the mortgage lenders
> would finance the insurance pool, making it no different from the
> FDIC in function. So, yes, I'd say you are overreacting.
>
> Of course there were plenty of people who thought the FDIC was a
> Socialist plot when it got started, too. I wonder how many people
> still think that, and whether they all self-insure their bank accounts?

What to Do with Fannie and Freddie?

It's humorous but like the zoo, you don't want to feed the animals. I made the mistake of replying to him.


On Aug 07 09:00 PM Bruce Vanderveen wrote:

> It is a pity slobs like Fre-Freddie exist. Seems they can't come
> up with anything rational so they degenerate into a name calling
> diatribe.
>
> Good Article!

What to Do with Fannie and Freddie?

Actually, no I don't feel like an idiot. I did notice that Freddie said they were still totally reliant on the Federal Government to stay afloat.


On Aug 07 05:22 PM Fre Freddie and Fannie wrote:

> Do you feel like an IDIOT now or what!!!
>
> Maybe we should put your wiriting in the same box and dig it down
> 10 feet as well.
>
> Here is another writer without a finanical degree pretending to know
> something.
>
> Freddie made money

FHFA Housing Price Increases Are Suspect: Better Stick with Case-Shiller

Caught by that old appraisal standard weren't you. It used to be that appraisers always excluded foreclosure or distress sales. When they only amounted to a miniscule percentage of total sales that made sense. Now that they are the market appraisers use them to derive value.

Sounds like your assessor chooses to live in the past in order to keep values artificially high. Cheer up though, if they lower the values they just have to find another way to tax you.


On Apr 24 04:41 PM Socialism cannot compete! wrote:

> Reminds me of the article in my local paper (small city) last week,
> talking about the new assessment values, and the amount by which
> they've declined. It noted that foreclosure sales were not included
> in the formula used to determine assessment values, because they
> were not considered "arms-length" transactions...but rather, distressed
> sales. Well, duh!! But so what??? The value it sold for IS what
> it is worth, regardless of WHY it was sold! That masks real property
> values -- whoever bought that foreclosure home at a steep discount
> is a buyer no longer in the market for other non-foreclosure homes!
>
>
> My bottom line, folks: so much of the data and interpretations we
> are currently being fed, are FUZZY and MANIPULATED. We are being
> given very nuanced views of current conditions. I believe we have
> MUCH farther to go on all this. And another 20% down on median home
> price, before all is done.

Fannie and Freddie's Unbelievable Proposals

If someone is current on their mortgage and demonstrates the ability to remain current what difference does it make whether or not they are underwater from a valuation point. You would seem to suggest that they be denied the ability to take advantage of a lower rate even though that action would further ensure their ability to service their debt. Denying them the opportunity to refinance is akin to cutting off your nose to spite your face.

Another Day, Another Bailout: Deleveraging Denial

Steve,
Thanks for your comments but one observation. If I'm not mistaken the ABS market is relatively new so any historical comparisons suffer from the fact that they represent an easy money period. If the statistics went back 20 or 30 years or more, I might be inclined to agree that they are at an all time high. Right now, they may well be simply representing an acknowledgement of the risk inherent in the product.

More on the Fannie/Freddie Heist

While I am not a big fan of the Fan/Fred bailout, I do think it is important to get the numbers right and properly analyze the risk. While Fannie and Freddie had approximately $5.3 trillion in debt and mortgage guarantees outstanding, these liabilities were offset by more than that amount of assets. The extent to which the assets do not perform will determine the ultimate loss to the Treasury. Potentially, it could be quite profitable. Here is a link to a back of the envelope analysis I did and a reader's reply that goes more in depth. blog.metro-real-estate...

Fannie and Freddie: 80% Dilution

A minor technical point. Treasury did not advance any money to the GSE's with the agreement. If you read it you will see that the Treasury gets $1 billion of preferred and the warrants for 79.9% of thecompany in exchange for providing the facilities. Not to say that money won't be advanced just that none has been advanced so far.

Will a 7% Mortgage Threat Doom Fannie and Freddie?

You wrote:
In essence the Journal is asking that one group of private enterprises (the GSEs) be slaughtered to save another group of private enterprises (the housing industry and banks).
You miss the point. They are hybrids, not private companies. The deal they made was that when times got tough they would act in the best interests of the country not their shareholders. In exchange they received an implicit government guarantee of their debt that let them rake in excess profits in the good times.
Sorry, you can't have it both ways.

Thoughts on the Housing Bill

I agree that the end of DAPs was welcome. Unfortunately, I believe that it is premature to celebrate their death. Here's an article I wrote a couple of days ago on the beginnings of their resurrection. blog.metro-real-estate.... You might also want to check out D R Horton's CEO's comments this morning on MarketWatch. www.marketwatch.com/ne.... They will be back.

The WSJ on Bernsetin's Gray: Inaccurate and Unfair

Gigot's article was one of the best I've seen on the subject. If you haven't read it I suggest you follow the link included in this article and enjoy some fine writing and excellent analysis.

Historic Financial Collapse Underway?

This guy is basing his conclusion that Fannie and Freddie will fail and thus end life on earth as we know it, on numbers he pulled out of the air. Nowhere does he show how he arrived at the projected loss numbers. While it is a back of the envelope calculation, here at least is an attempt to logically arrive at some sort of reasonable loss estimate for the two. blog.metro-real-estate...

Fannie and Freddie: Let’s Call the Whole Thing Off

Good article, but why should the debt holders take a "modest" haircut? Why not go through a BK and let the chips fall where they may.

Calling a Housing Bottom

I hope you're wrong as well, User 151885.

Calling a Housing Bottom

Thanks to tcornelison for pointing out the reality. There is plenty of mortgage money available with little or no down payment required via FHA. Essentially, the author has a good premise but failed to do his homework on the mortgage market.
User 151885, if you are saying that we may be near or at the bottom and looking for a leveling off and eventual recovery then I agree with you. I said as much on my blog last night.blog.metro-real-estate.../