Dans Deep Creek Blog

Fannie/Freddie Nationalization: Where Will It End?

Excellent article.

As I've said from the day they announced this plan what exactly is the plan when 2010 comes and they can't sell these loans then either?

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And as for more regulation, in 2002 didn't we pass massive regulation to aimed at rooting out accounting fraud and protecting shareholders? Bear, Lehman, Merrill, Fannie, Freddie and AIG shareholders aren't exactly feeling like it protected them. The problem of course is that these things always solve the last problem, after the fact, and yet here only 6 years later we have another crisis of a slightly different nature. Hopefully at least we have realized along the way that not everyone should own a home and that it actually makes sense to have renters and lending standards. Shocking as it is.

NAR's Chief Economist: Totally Clueless

Here's another good example of a clueless Realtor:

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NAR's Chief Economist: Totally Clueless

Realtors are in the "it's a good time to buy business," always have been, always will be. For months they had been preaching about it being a great time to buy because of low interest rates. Now that they are even lower do you think they're telling all those people they persuaded to buy over the last few months that they should have waited for even better deals in terms of both purchase price and interest rate? I don't think so! Patience is a virtue and from my experience the Realtors I have dealt with have none of it, they all want the full commission right now. And they got all of them a few years back, now they want next year's commission right now too.

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Fannie Mae: 'Business As Usual'

dlaw,

So if they fully intend to nationalize the home loan industry where does it stop? Do they make mortgage brokers and loan officers agents of the federal government as well?

I do not believe that they can be successful in artificially propping up home prices forever, so eventually something has to give. Look at the home price index from 1890-2000 and then 2000-2005 (en.wikipedia.org/wiki/...), something is clearly wrong with the picture and something is unbalanced. Then look at this new chart (seekingalpha.com/artic...) from another Seeking Alpha writer within the last few hours and observe how Fannie and Freddie debt relative to GDP exploded in the same time.

My question then is can the government really step in and provide long-term support to bubble prices or is it only a short-term allusion of doing so? Even if they really do not intend to re-privatize Fannie and Freddie in 2010 or beyond.

On Sep 10 09:39 PM dlaw wrote:

"They are not going to sell at 10% a year. That's a nonsensical soak to the laissez-faire crowd.

The GSE book will expand ad infinitum."

Fannie Mae: 'Business As Usual'

Amen! $100 billion more to buy loans no one else wants in the short then. But then what happens in 2010 when they have to start selling off these loans at a rate of 10% per year? What if no one wants to buy them either?

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Will the Bailout Alleviate the Housing Crisis?

I couldn't have said it any better myself. Nice article.