The government early Sunday announced it was taking control of financially shaky mortgage giants Fannie Mae and Freddie Mac. The deal should make it easier and cheaper to get a mortgages, but won’t help troubled borrowers, the Associated Press reports:
“The bailout will give the mortgage industry a stability that we haven’t had in a couple of years,” said Rich Cosner, president of Prudential California Realty. “But frankly no, it won’t help (struggling borrowers) to refinance.” (READ MORE HERE)
Here’s what you need to know …
- News Flash from Associated Press
- U.S. Treasury’s focus: “Market stability, mortgage availability and taxpayer protection.”
- White House statement: “Critical to the health of our financial system”
- Fed boss Bernanke says: “Necessary steps”
- Wall Street may cheer Fannie, Freddie bailout (Associated Press)
- Fannie, Freddie blind to the bubble (Associated Press)
- Video of Treasury Secretary Paulson discussion the move (Bloomberg)
- How Freddie overstated its financial cushion (New York Times)
- Presidential campaigns react (New York Times)
- The new bosses at Fannie/Freddie (Reuters)
- Vote: Will this help O.C. housing?
Until the Federal Reserve, a private bank is put out of business, don’t expect recovery.
UNBELIEVABLE!
This mortgage mess is going to pull down the entire country.
President Bush and Government will protect us in Orange County and California from meltdown.
The “welfare state” is here to stay. No responsibility for anyone anymore. Why do I pay off my debt?
Is this treason or not?
Blub, blub, blub….maybe Sarah Palin can stop the coming crash with some lipstick….
The crack in the wall is getting bigger and bigger. I don’t think that the army corps of engineers would be able to patch this one. Half of the banking industry is flooded and the waters continue to rise. How many more failing american institutions can Abu Dabai rescue before they deplete their available reserves? Keep your eye on Downey Financial. The fannie mae and freddie mac bailout is Bush’s strategy to delay the eventual collapse. He and his fed partners are kicking the can down the road, so to speak, so when Obama takes over they’ll have someone else to blame. If I were Bush I would be chatting with Laura about buying a retirement home somewhere outside the U.S. I don’t think that Saudi has an extradition treaty. He seems to be close friends with the Prince. I even saw them holding hands and kissing one another in public. That might be a good choice.
Yes Brian, wring your hands and gnash your teeth! Its far better to suffer complete economic meltdown and usher in “Great Depression II” than to step in and take over institutions that never should have been allowed to be private anyway but why not just have one more thing to complain about…Lord knows you’re in good company on this board! And DJ, you whine and complain about the “welfare state” yet you are probably one of those a**-hats on this board that promote “jingle mail” and such brazen acts of thievery that have put the government in the position of having to make this move. If you aren’t that type, my apologies. If you are like any of the other idiots here who’s views are being followed by the scum and vermin in this country as they walk away from homes simply because the value has fallen, then burn with it scum!
There are criminals and thieves on this very board that openly advocate people just walking away from their homes driving prices down further while bankrupting society and they laugh about it. Personally id like to see anyone walking away from their homes simply because the value has dropped thrown in prison along with each and every criminal on this board to be publicly flogged and personally bankrupted. For people to walk away from a 30-year fixed at say 6.5% or lower simply because of declining values as many have, put Fannie and Freddie behind the 8 ball and is a criminal act imo. It damages their neighbors, their city’s, their financial institution, the overall economy, and each and every taxpayer forced to support a bailout of a failed institution. In lieu of prison, my hope is that each and every festering pustule of a human being that acts in this fashion or advocates it suffers great personal financial loss…your job, your investments, your marriages (as if anyone would marry such scum that are so selfish and insufferable as these cockroaches), everything!
Maybe America deserves all the bad things that comes its way with a citizenry that cares only about themselves and cares only about a “whats in it for me” mindset. It used to be that people would do anything and everything to keep their debts paid and if money was lent, money was paid back barring death or job and income loss. The dirty, filthy pond scum on this board and those loan cheaters forcing the government to take this drastic step prove very strongly otherwise…I am ashamed that you are called Americans just like I am you vermin. May your lives forever be miserable!
this is good
the interest rate will be reduced
i hope my home price will go up by $100K by the end of th year so that i can make more profit
I keep hearing that we are not in a recession. Perhaps because we are in a depression.
From the Reuters article: “The government is going to be basically pulling a lot of this stuff onto the U.S. government’s balance sheet and that may be a concern for the dollar but it is going to be a positive for our financial system.”
Yes, robbing the public and giving it to the financial players is a positive for the latter.
poor poor bitter renters. Home prices will continue to be inflated and their dream of 3:1 income ratio of owning a home will never happen. Once again, they’ve missed the boat of owning as their government continues to bailout the irresponsible lenders and borrowers.
It’s foolish to own your own home…on any real balance sheet, it’s a liability…the key is to rent your own place and own income producing property with a positive cash flow. The problem in the OC is that house prices are still so absurdly high it is impossible to buy any investment property that will pencil out with a positive cash flow because rents are relatively low but much more in line with renters real income. Until house prices begin to go down to levels that equal rentals, we will not be in balance and positive cash flow on any newly purchased income property cannot be acheived.
I just spoke to a Realtor. They told me now is a great time to buy!
Now that the Federal Government is the title holder to 50% of residential real estate, we should all feel safer.
Yet another example of Republican failure on the economy.
Did Marx say that it would happen like this? Just curious.
They should just let them go under, if people can’t afford their payment then oh well they shouldn’t of gotten the loan in the first place! I’m tired of paying for peoples mistakes!
quiero_dinero, are you kidding…home prices are facing deflation as there is no money available to buy…home prices are coming down another 20% here in oc…good luck….by the way, what is your address so i can pick up your foreclosure?
looking for stats, check out the least affordable housing, per cnbc yesterday…irvine metro…#8 on the list…only 25% of the residents can afford to buy….oh yeah, if there is a bank that will fund them…
im sick of idiots like this guy, i did the right thing, sold my house 2 years ago (as anybody with half a brain could have seen this coming), made great money and have been renting since. why should i be responsible for bailing out homeowners who should have never owned in the first place?
Isn’t this Treason?
This is what happens when you vote for the war party (aka Republicans) or the welfare party (aka Democrats). They pretend they are fighting, but in the end they compromise and spend money they don’t have at the people’s expense. If you support either party, you are part of the problem.
In related news: Fannie Mae 30 yr bond prices are sharply up this morning meaning the rates have plunged…into the 5’s! You could even get an expanded loan limit ($417,000-729,000) 30-year fixed rate at 5.875% under 75 DTI. Treasuries are rising however as a government back Fannie Mae bond carrie a higher yield for the same guaranteed return. Financial markets are sharply up as well as this is widely seen as a stabilizing move for the overall economy. We’ll see if the initial euphoria in the markets weakens a bit over the next couple of weeks but thus far it looks good!
Sunnsea,
Yeah, I read “Rich Dad, Poor Dad” too! And here’s the thing: Robert Kiyosaki DOES own his house…he owns a LOT of them in fact….or should I say, his CORPORATION owns his houses! And he paid cash for them. You are right, if you get a loan it IS a liability…of course it is a liability with tax benefits along with the intangibles of ownership. Renting is just an expense with no other benefits other than monthly cost…but over time that rises as well usually doubling evey 15-20 years. It’s not “foolish” to own you own home if you own it through your CORPORATION! I take it you as a perma-renter don’t have the pesos necessary to do such a thing as pay CASH for a home? Most permas don’t!
As for the “affordability index” I have in posts past shot enough holes in that bogus statistic (and others like it) to make it look like swiss cheese. This ain’t Wichita Kansas, homeboy…prices haven’t equaled rental rates since the 70’s and even then they were woefully undervalued. If you’re looking for your lottery ticket because you ain’t got the scratch to buy and hold then you should consider moving…I hear there are some great buys in Wichita!
Sorry, I meant to address that last paragraph of my previous post to “joke” . Joke, yes you fortunately “got out” and I presume took some good money off the table…but a 20% further drop in OC prices would put PITI housing payments BELOW rents and that ain’t gonna happen! I agree prices will fall further but ONLY as low as $425,000 and likely no more than to $450,000 as that puts prices in range of the AVERAGE HOMEOWNER in OC. And if 30-year rates can reach the mid-5’s, $450,000 will be where they settle in and stabilize
Please note I said “Homeowner” not perma-renter. I will not explain this point yet again but just trust that the “Homeowning” median or average income is FAR higher than the OVERALL median or average income in ANY geographical area making things like the “affordability index” one of the more stupid and useless statistics a person can roll out!
Larry-
Thanks for the info about the effect on rates by this takeover.
I don’t think the takeover was ideal, but having GSE’s in the first place wasn’t ideal. The mortgage market hasn’t been a free market since the 1930’s.
Want to know what REALLY caused this mess?
Read “CHAIN OF BLAME”
Lou Pacific
Real Estate and Mortgage Company Consultant
Serving OC for 30 Years
Lou Pacific,
I have my own theories on what the ROOT of this mess was: The GSE’s and FHA stubbornly refusing to raise loan limits after 2004 (Fannie/Freddie) and Dec. 2003 (FHA). Prices were still skyrocketing then and the subsequent vacuum was filled by: Subprime and Alt-A mortgages! “Chain of Blame” covered the “Who’s” behind the Mortgage Meltdown but it was the refusal to raise loan limits at an acceptable pace and to just cut them off completely at late 2003 levels that “Screwed the pooch” imo. Why are loan limits so much higher now that they couldn’t be raised back then? A lot of people in the high priced areas that exploded in price after early 2004 could have benefited from getting an FHA 100% financing loan for $400,000+ at 5.5% with PMI of 0.5% rather than having to go Subprime with a 2/28 on a 6-month LIBOR with a margin of 7-8% don’t you think? I KNOW it would have!
We can blame the Wall Street players all we want (and Lord knows they deserve it) but this was what REALLY started it all. Demand was there but the “safe” product wasn’t! And Yes Matt, you can use my premise in a follow up or in the next printing!
LL~
You may want to consider that buy soon….5.5% on a 30-year fixed for a $400,000 loan is the equivalent payment to a $350,000 loan at 6.5% though your tax basis is slightly higher. You “may” have more to choose from now too and have more bargaining power. Just a thought!
p.s. of course, now that the Gubment has taken over the GSE’s, rates may stay low for awhile since inflation pressures should be mitigating over the rest of the year. Either way, good luck!
Larry-
Due to this unexpected turn of events, I’m a lot closer to making a purchase than before. Can you tell me what the debt ratios are for the conforming (<$417k) rate sheets you’re looking at? Also, do you happen to know what % of home value these lenders use when calculating the insurance portion of PITI? My assumptions figure 0.5% of the home’s value for insurance.
If I do buy, it won’t be for a few months to take advantage of the holiday slowdown in sales.
Fed just gave a discount to those who buy or refinace. Interest rates should drop by 0.5%-0.75%, saving Billions to new home buyers and home owners. At median OC price, financing $400K, this results in $1500-$2200/year savings after taxes, which more than offsets the higher gas prices. About $500B/year in new loans results in at least $2.5B/year savings. Affordability just increased by as much as 5-10%, meaning that for all home owners, the housing losses have just been reduced by about $500B. (5% of $10Trillion in realestate). This “savings” will speed the eventually economic recovery. Additionally, under Fed management, more loans will be restructured providing homeowners have sufficient income to qualify. Loan modifications can include interest only or shared equity mortgages at now very attractive rates. Fed probably just cut one year off the housing decline and provided the economy a future boost due to fewer mortgages going negative. Price decline being 5-10% less should also prevent more mortgages from going thru foreclosures.
Should The US government bail out American corporations?
Does corporate America share its profits with the tax payers? The answer is absolutely not.
Do they share the profits with their employees? The executives are paid millions.
The US Government should bail out all corporations large and small is that right? The answer is no. If it is a viable business, they can raise the money from investors, if not, let them close shop.
If the government decides to bail them out if should be at a cost (like shares in the company) where the government will make money and have a say in running the company. Even better have a public referendum where the voters decide.
Carmakers want money from the government; the financial institutions want money - where does it stop?
It is about time corporate America should learn they have to stand on their own feet. Where is corporate America financial responsibility?
They claim the government is abusing its financial responsibility; it seems Corporate America is no better. They also go to their workers to take a pay cut, is that fair? It seems the little guys are the ones that always pay the price for corporate financial abuse and miss-management.
Other corporations in the world are not asking to be bailed out - they go out of business.
Jay Draiman
PS
The corporate barracudas have no conscience they will step on anyone, stab anyone in the back and fudge the numbers to climb up the corporate ladder and receive the hefty bonuses.
As family values have declined in the last half a century so has corporate integrity and honesty, it seems that corporate America will do almost anything for the buck ($) no holes barred.
What a shame that corporate America has sunk so low.
The government is no different, honesty and integrity is a foreign language, they only serve the special interest groups. (We all know why).
What happened to the American people who placed their trust in the government? (The public officials they voted for).
We are faced constantly with another corporate or governmental scandal of wrongdoing. When is the American public going to wake up and demand an honest government and honest corporate America? Americans wake up before it is too late.
Jay Draiman