What will happen if Fannie and Freddie go under?

[robert higgins]

If Fannie and Freddie go under, aka Fed takeover, what do you think the affect on the housing market will be?

If little or no money is available to the consumer to buy or refinance how far do you think the housing market will sink?

What will happen to the banking and mortgage industry?

What will happen to the appraisal industry???

 

[Lost Cause]

What Would Happen Is Beyond The Imagination

If Fannie and Freddie went under, you wouldn't have to worry about the housing market. Life as we know it would be over; the USA would be just another third world country if it actually managed to last. There's just not enough money to cover losses like that.

 

[Don Clark]

If Fannie and Freddie went under, you wouldn't have to worry about the housing market. Life as we know it would be over; the USA would be just another third world country if it actually managed to last. There's just not enough money to cover losses like that.

See below. They would operate as government owned, not sponsored. see below:

http://biz.yahoo.com/nytimes/080711/1194793612725.html?.v=4

 

[Greg Bell]

The commie Senate will just nationalize them, poof , instant solvency.

 

[xmtraterbcra]

If Fannie and Freddie went under, you wouldn't have to worry about the housing market. Life as we know it would be over; the USA would be just another third world country if it actually managed to last. There's just not enough money to cover losses like that.

I predict it is going to happen. The current system is totally ingenious and overly complex. A simpler system is needed, and that means direct management by the US taxpayer, i.e. Fed. I expect a very streamlined system. Accurate appraisals, little or no home appreciation. True demand/supply will determine property value (rather than say consistent overvalutions by appraisers) and rents. Throw in the fact that the large population of baby-boomers is graying and going to retirement - not only in the US, but other countries such as Western Europe and Japan. Doom and gloom is the order of the day. Our housing market will eventually look more like something you would find in Germany.

But, I believe, the profession will be alive, well and thriving (at least for those who survive through the crisis) - as it is in Germany.

Bert Craytor, SRA

 

[redfish]

I watched that 911 internet documentary called "Loose Change" last night, I just don't even know anymore what the heck the goverment is up to.

I'm sure, if taken over by the goverment more terrible things will happen following a short "good time" with the gates of credit opening just to instill confidence in the "street" and give all the cronnies enough time to liquidate before the average american panics and the market crashes. If the goverment takes over I might pile all the savings I have into the market for short term gains, maybe a week or two than sell. After I stock up on guns, ammo, and spagetti O's (the ones with the minature hot dog pieces) I will stash the rest of the loot and wait for the nuclear winter global finacial meltdown to subside, reemerge from my bunker, and find a nice developing nation to invest in.

 

[Caterina Platt]

This quote is from the Bloomberg article quoting Former Fed Reserve Bank of St Louis Chair, Poole, who now is an anaylst at the Cato Institute. Here's the link for legality sake, but it was posted in another thread yesterday.

http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=as4DEc5UFopA

This portion just caught my eye.

They can withstand the slump in part because most of their investments are mortgages made before 2006 when lending standards were tighter, making them less likely to default, said Eileen Fahey, a Chicago-based analyst at Fitch Ratings.
``We do not believe they are technically insolvent,'' Fahey said. ``People seem to lose sight of the fact that a majority of the mortgages that they are holding and are guaranteeing were originated pre-2006.''

What? Did I miss something? What does the date of 2006 have to do with anything other than those mortgages would be more seasoned? There was no ground breaking deregulation in 2006, was there? Sub prime, Alt A, No Doc, etc. were all very well alive and flourishing far before 2006. I'm afraid this analyst is leaning on false hope and assumptions here.

Poole, in my opinion, is outside the Federal Reserve family now, if you will, and probably far more able to speak his true mind than Bernanke and Paulson. Although, he's always been a sharp critic of Fannie/Freddie, even when within Federal Reserve system. I'm afraid he speaks more to the truth than others are willing to let loose in public.

 

[Lost Cause]

Get Real!

It is amusing to see these people claiming that standards weren't relaxed until 2006. What was the date on the appraisers' petition?

Will someone please tell the emperor that he's out there naked?

 

[LA Woman]

Ok, so at what point can we say The Sky Really IS Falling?

 

[redfish]

The homeowner bailout is the sign that the sky is falling. IMO any help giving to borrowers that are in foreclosure, essentially "bailing someone out", will only prolong the housing market turnaround. The cycle must run it's course. The redisturbution of the current housing stock is imperative to returning a a stable real estate market.