Fannie Mae Reverse MortgageMae Fannie Mae Reverse Mortgage
Mortgages bleeding unlawfully (...allegedly) - The Register
After one of its affiliates was charged with malpractice, IBM found itself in the US government's cross hairs. Specifically, Lawrence said, Seterus archived thousands of bogus forms to get $500 disbursements that would go unnoticed long ago by the Massive Federal Administration. "IBM and Seterus staff often work from the same institution and many IBM staff have switched to Seterus and the other way around," the submission says.
In favour of Fannie & Freddie
However, the government's action triggered a brief bullish move on the exchange, which was wiped out by edgy traders within the first few hours of the market. At the end of Sunday the US Treasury Secretary, former Goldman Sachs head Henry "Hank" Paulson, pledged that the Federal Reserve and the US Treasury would each grant loans to avoid a cash crunch at Fannie and Freddie.
Immediate cash flow crises seemed to have been avoided, and a $3 billion Freddie Mac public bond offering - part of normal funding transactions - was well backed by investor support. So far, Fannie and Freddie have incurred $12 billion in mortgage loss since the onset of the global financial crunch last summers, due to the declining value of the houses behind their mortgage-backed assets and the fear of increasing mortgage failures.
Mr Paulson gave no indication of how much the administration could spend, if necessary, and officers proposed yesterdays that in the end they would not have to spend any money at all. Soon the Treasury Department will have to indicate how much money it plans to inject into the two units, but this injection of money must be very significant - perhaps up to $20 billion or more for each - in order to quickly and efficiently reverse the adverse psychological effects.
"In the end, we see these drastic actions neither as a turning point for the US real estate markets nor as a signal that the downswing will be much more severe than previously thought. Stocks in the National City rushed 15 percent to rumors that she too was suffered from a run, and the trade was stopped until the bench released a rejection.
Lehman Brothers forecast in a seperate paper that WaMu would loose $26 billion due to the financial turmoil. Exactly what are Fannie Mae and Freddie Mac? These have been established by the governments so that mortgage loans are always readily available and more people can own their own houses.
They do not do what they do to give directly to the borrower. Thats because, rather than having to wait years for homeowners owe their mortgage payments off, those primitive lenders immediately get a flat-rate amount that they can use to finance more lending. What's more, they can use their own credit to finance more borrowing. Officially the Federal National Mortgage Association, Fannie gets her cute name from the FNMA name.
Will they be another subprime mortgage debt casualty? They can only buy and resell conventional, medium-sized credits under strong German regulatory supervision. Where' d Fannie and Freddie get their cash? It finances its purchase of mortgage bonds from a pools of equity provided by stockholders and financed by charges and by the sale of mortgage-backed debt instruments.
Even better, because of their historical ties to the US Treasury, investors believe that Treasuries are similar to US Treasuries - a move away from the most secure investments in the world' financials. Any mortgage collateral provided by Fannie and Freddie is accompanied by a claim that it is not covered by the USG.
What made public intervention necessary? The Wall Street has been losing its appeal for subprime and other mortgage assets, and home loan business is being refused to all but traditional credit-worthy borrower. Fannie and Freddie now support two third of the new mortgage volume. What made public intervention so urgent? Mortgaging would grab up and drastically lower house prices and provoke a bad recession. 4.
Partially for reasons of ideology, the Bush administration has tried to weaken the hold of Fannie and Freddie because it believes that unhindered financial services are better at delivering mortgage funding than anything the German state has to offer. Matters are now what happens further out as Fannie and Freddie look to lift new funds worth millions to fund their next wave of mortgage buying.
One thing is certain: if the US administration has to invest taxpayers' funds in fundraising in the course of this or next year, it will have to demand a fine from Fannie and Freddie's current stockholders or expect a policy response. It seems that the world' s finance system has prevented another possible collapse - but that does not mean that Fannie and Freddie stockholders have not yet been exterminated.