{"id":4267,"date":"2008-09-08T08:40:01","date_gmt":"2008-09-08T15:40:01","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=4267"},"modified":"2008-09-08T08:40:01","modified_gmt":"2008-09-08T15:40:01","slug":"update-on-fannie-and-freddie","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4267\/update-on-fannie-and-freddie\/","title":{"rendered":"Update on Fannie and Freddie"},"content":{"rendered":"
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Well, it happened.\u00a0 In case you haven\u2019t heard the news, Fannie and Freddie were bailed out by the Federal Government over the weekend.\u00a0\u00a0 I\u2019m not going to go over all of the details but just try to hit some \u201chigh points.\u201d<\/span><\/span><\/span><\/p>\n

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So, here goes:<\/span><\/span><\/span><\/div>\n

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1. The Federal government now owns 80% of Fannie and Freddie.\u00a0\u00a0 That means that the shareholders in those two companies lost 80% of their equity in the company compared to what they had last Friday.<\/span><\/span><\/span><\/div>\n

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2. Why did the Government do this?\u00a0\u00a0 It\u2019s pretty simple.\u00a0\u00a0 The markets had lost confidence in the long term viability of the two institutions and therefore the debt that they have issued was being questioned and their ability to finance additional housing was being called in question.\u00a0\u00a0 This was done to stabilize and calm the financial sector of the markets which were very volatile to say the least.<\/span><\/span><\/span><\/div>\n

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3. What has changed since Friday?\u00a0 A\u00a0 couple of things:\u00a0 1) The \u201cunofficial\u201d backing of Fannie and Freddie\u2019s debt by the US Government is now official.\u00a0\u00a0 2) The question of what will happen to shareholders in the company has pretty much been answered.<\/span><\/span><\/span><\/div>\n

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4. What hasn\u2019t changed since Friday?\u00a0 The problems in the loan portfolios at Fannie and Freddie haven\u2019t gone away.\u00a0\u00a0 The problems in the housing market haven\u2019t gone away.\u00a0 However, today the markets so far have been breathing a huge sigh of relief that says, \u201cYeah, Uncle Sam is here to protect us!\u201d<\/span><\/span><\/span><\/div>\n

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So what does this mean going forward?<\/span><\/span><\/span><\/div>\n

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1. I\u2019ve already heard that a lot of economist are saying that there could be a significant drop<\/strong> in mortgage rates.\u00a0\u00a0 I\u2019m not so convinced that we\u2019re going to see THAT BIG<\/strong> of a drop <\/span>for a couple of reasons:\u00a0\u00a0 a) The US Government just became on the hook for an additional $5 Trillion in debt and that will have an impact on the cost of treasury debt and so forth.\u00a0 b) The additional borrowings by the government are going to have an impact on the value of the dollar and that will make US debt more expensive.\u00a0\u00a0 c) The only thing that has Read more<\/a><\/span><\/span><\/span><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Well, it happened.\u00a0 In case you haven\u2019t heard the news, Fannie and Freddie were bailed out by the Federal Government over the weekend.\u00a0\u00a0 I\u2019m not going to go over all of the details but just try to hit some \u201chigh points.\u201d So, here goes: 1. The Federal government now owns 80% of Fannie and Freddie.\u00a0\u00a0 […]<\/p>\n","protected":false},"author":44,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26],"tags":[],"class_list":{"0":"post-4267","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":14075,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/14075\/obamas-plan-for-fannie-and-freddie-its-fha-as-it-turns-out\/","url_meta":{"origin":4267,"position":0},"title":"Obama’s “plan” for Fannie and Freddie? It’s FHA, as it turns out.","author":"Greg Swann","date":"February 11, 2011","format":false,"excerpt":"That's not what they're actually saying. But the law of unintended consequences will win out in the end. From the Wall Street Journal:All of the administration's proposals envision a scaled-back role for the government. One includes a new government backstop of certain mortgages under a federal \"reinsurance\" model, while another\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":10963,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10963\/barney-frank-i-believe-this-committee-will-be-recommending-abolishing-fannie-mae-and-freddie-mac-in-their-current-form-and-coming-up-with-a-whole-new-system-of-housing-finance\/","url_meta":{"origin":4267,"position":1},"title":"Barney Frank: “I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance.”","author":"Greg Swann","date":"January 22, 2010","format":false,"excerpt":"To say anything at all would be way too much. From the Wall Street Journal:\"The remedy here is...as I believe this committee will be recommending, abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance,\" said Rep. Barney Frank\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4256,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4256\/excerpts-from-the-press-release-about-the-death-of-fannie-and-freddie\/","url_meta":{"origin":4267,"position":2},"title":"Excerpts from the Press Release about the Death of Fannie and Freddie…..","author":"Tom Vanderwell","date":"September 7, 2008","format":false,"excerpt":"Treasury Press Release I have clearly stated three critical objectives: providing stability to financial markets, supporting the availability of mortgage finance, and protecting taxpayers \u2013 both by minimizing the near term costs to the taxpayer and by setting policymakers on a course to resolve the systemic risk created by the\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3360,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3360\/update-on-the-fannie-and-freddie-issue\/","url_meta":{"origin":4267,"position":3},"title":"Update on the Fannie and Freddie Issue","author":"Tom Vanderwell","date":"July 14, 2008","format":false,"excerpt":"Okay, here\u2019s an overview of my take on the Fannie Freddie issue: Do you think the Stock Markets like the Fannie Freddie Bailout? Uh, that would be a classic example of an initial elation followed by the let down that comes from looking at the details.\u00a0\u00a0 I\u2019m not going to\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"Do you think the Stock Markets like the Fannie Freddie Bailout?","src":"https:\/\/straighttalkaboutmortgages.files.wordpress.com\/2008\/07\/dow-in-time2.gif?w=350&h=200&crop=1","width":350,"height":200},"classes":[]},{"id":16161,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16161\/priceless-our-home-ownership-strategy-will-not-cost-the-taxpayers-one-extra-cent\/","url_meta":{"origin":4267,"position":4},"title":"Priceless: “Our home ownership strategy will not cost the taxpayers one extra cent.”","author":"Greg Swann","date":"August 16, 2012","format":false,"excerpt":"The American Enterprise Institute on the premeditated assault on the prime mortgage:When it comes to a government centered society and its deleterious consequences, our Government Mortgage Complex is the undisputed poster child. There has been no greater economic failure than the collapse of the housing market due to decades of\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":14070,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/14070\/farewell-to-fannie-and-freddie-hold-your-breath\/","url_meta":{"origin":4267,"position":5},"title":"Farewell to Fannie and Freddie? Hold your breath…","author":"Greg Swann","date":"February 8, 2011","format":false,"excerpt":"The Obamanation plans to offer up three proposals to eliminate FannieMae and FreddieMac from the secondary mortgage marketplace. Expect to hear much mournful keening, in coming weeks, from the country's best enemy of private property, the National Association of Realtors. From the Wall Street Journal:More than two years after the\u2026","rel":"","context":"In "Big Mother"","block_context":{"text":"Big Mother","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/big-mother\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4267","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=4267"}],"version-history":[{"count":2,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4267\/revisions"}],"predecessor-version":[{"id":4269,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4267\/revisions\/4269"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=4267"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=4267"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=4267"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}