Tuesday, May 19, 2009

'Severe' weaknesses for Fannie and Freddie

Shocker! Fannie Mae and Freddie Mac are still in trouble:
Fannie Mae and Freddie Mac, charged with helping lead the nation out of its housing crisis, are facing "critical" financial problems, federal regulators said Monday.

The companies suffer from severe financial, operational and compliance weaknesses, the Federal Housing Finance Agency said a report to Congress detailing its annual examinations of the firms. Taken over by the government in September, Fannie and Freddie are not able to operate without federal assistance. ...

Fannie and Freddie play a vital role in the national housing market, accounting for a combined share of 73% of mortgage originations in the second half of 2008. They also serve central roles in the Obama administration's foreclosure prevention plan.
The Obama administration is forcing these companies to issue the vast majority of this country's new mortgages—at some of the lowest interest rates in history—while housing prices are still falling. I doubt this is good for Fannie and Freddie's financial health in the long run. I expect these companies to keep sucking up your tax dollars as President Obama pats himself on the back for "doing something about the housing problem."
Posted by at 6:31 AM
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18 comments:

  1. Bill Martin for E.O.SMay 19, 2009 4:56 PM

    I think the real story here is the 73% number.(Real Banks) that understand what a mortgage actually is, don't want to play the game just yet..Side note, this is a first class blog filled with solid reading and charts, MORE CHARTS PLEASE. I wish I found it sooner.

    ReplyDelete
  2. AnonymousMay 19, 2009 8:15 PM

    From the very few comments you can conclude that very, very few are reading this blog!!!

    ReplyDelete
  3. ssfinkMay 19, 2009 11:48 PM

    unhommerchant, I do not understand your motivation for that comment.

    I read this blog nightly and rarely post. if you look at big name rags, the amount of comments really only reflect flame wars, petty bickering and people with nothing better to do than slam the paper or author. Who has that much time and energy to engage in that? (couch potato's?)

    The reason you dont see too many comment is that it is quite possible that the audience here is a bit more mature and professional, just my guess.

    Also, there used to be a lot more posts but the moderator wisely eliminated the ability for Anonymous comments.

    ReplyDelete
  4. AnonymousMay 20, 2009 7:36 AM

    "the moderator wisely eliminated the ability for Anonymous comments."

    That is incorrect.

    ReplyDelete
  5. AnonymousMay 20, 2009 7:41 AM

    Has anyone else noticed that Prince William county continues to get hammered? Check the stats at www.mris.com

    PWC is not coming back. The vicious cycle of declining property values, declining tax revenues, and declining municipal services (which contributes to declining property values) is well under way.

    ReplyDelete
  6. AnonymousMay 20, 2009 7:50 AM

    montgomery county just started tanking too. I hope it tanks back to normal prices. I would like to buy one day.

    ReplyDelete
  7. AnonymousMay 20, 2009 11:16 AM

    "Has anyone else noticed that Prince William county continues to get hammered? Check the stats at www.mris.com"

    What do you mean. If getting hammered means, prices are still coming down, maybe not. Look at the second chart (prices) - they have quit falling and gone flat for 5 months straight.

    http://www.recharts.com/mris/mris_9.html

    If "getting hammered" means prices are way down and not coming back, I agree. certain segments where homes arent selling (i.e. high end) are going to have problems and will have to drop prices. However, I dont see anything here to indicate median drops any further.

    ReplyDelete
  8. Supernintendo ChalmersMay 20, 2009 12:31 PM

    "I doubt this is good for Fannie and Freddie's financial health in the long run."

    they died long ago.

    once these servicers stop receiving the reanimating handout and collapse, everyone will get their house for free with unintended hilarious consequences. sounds like a Disney movie.

    ReplyDelete
  9. JamesMay 20, 2009 3:19 PM

    ssfink said...
    "Also, there used to be a lot more posts but the moderator wisely eliminated the ability for Anonymous comments."

    The conversation seems to grind to a halt when anonymous comments are disabled, so I am selectively disabling anonymous comments. If I post something that I suspect will result in a flame war, I temporarily disable anonymous comments. If I notice a flame war starting, the anonymous commenters will get shut out.

    I don't know how many unique visitors Bubble Meter gets, but last summer and fall I measured roughly 1500-2500 page loads per day.

    ReplyDelete
  10. EconomicDisconnectMay 20, 2009 6:32 PM

    I read every night and have for a LONG time. Bubble Meter often highlights the most important item of the day as it relates to housing, and I appreciate the fine work!

    ReplyDelete
  11. AnonymousMay 20, 2009 6:45 PM

    Anonymous said...

    "montgomery county just started tanking too. I hope it tanks back to normal prices. I would like to buy one day."

    Could you provide a link or specify what is happening?

    ReplyDelete
  12. AnonymousMay 20, 2009 7:13 PM

    "Could you provide a link or specify what is happening?"

    sure...Nobody has bought a thing in MoCo for about 2 years. Prices just started tanking again starting last month. They seems to stop tanking for 2 months there, but now they are back on track for correction.

    http://www.recharts.com/mris/mris_4.html

    http://realestate.yahoo.com/Maryland/Rockville

    http://realestate.yahoo.com/Maryland/Potomac

    http://realestate.yahoo.com/Maryland/Gaithersburg

    ReplyDelete
  13. OliveMay 20, 2009 8:10 PM

    "Nobody has bought a thing in MoCo for about 2 years."

    Well, I think that might be a bit of an exaggeration :), but it's true that MoCo has been a little behind the curve in their price correction, but they are now starting to catch up in a big way.

    ReplyDelete
  14. AnonymousMay 20, 2009 8:16 PM

    "Well, I think that might be a bit of an exaggeration :)"

    yeah I get that way when Im extremely excited. I cant wait to buy a home next year or the year after.

    ReplyDelete
  15. AnonymousMay 20, 2009 10:02 PM

    "Has anyone else noticed that Prince William county continues to get hammered?"


    For PWC, April 2009 vs April 2008 YoY:

    Dollar volume down -15%
    Average sold price down -27%
    Median sold price down -33% (!)
    Total units sold up +16%
    Average days on market down -34% (!)

    Those are some pretty tough numbers for the "Spring Selling Season".

    I explained what precipitous property value declines do to municipal budgets, and what budget declines do to municipal services (roads, schools, etc.) That's what I mean by "getting hammered"

    ReplyDelete
  16. ssfinkMay 20, 2009 11:30 PM

    "Anonymous"#1 see James' post. I was correct for at least some time I see. He re-enabled it on a as needed basis.

    1500-2500 page loads per day is a good number.

    Thanks James for backing me up, keep up the good work.

    ReplyDelete
  17. AnonymousMay 21, 2009 8:57 AM

    "I explained what precipitous property value declines do to municipal budgets, and what budget declines do to municipal services (roads, schools, etc.) That's what I mean by "getting hammered"

    Got it - thanks.

    ReplyDelete
  18. Costa Rica Real EstateAugust 03, 2009 1:08 PM

    One thing is for sure¨even though prices are falling PWC or Montgomery, I believe that in a year from now they are going to be back to normal therefore, to buy a property here is great idea since it will give you the chance of buying cheap to then sell at a higher price, if that is what you are looking to do

    ReplyDelete

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