Freddie Mac and Fannie Mae are starting to creep towards being solvent again. The government had to take control of the 2 troubled firms in 2008, and has lent both houses collectively more than $130 billion. The pending foreclosures postponed by legal issues involving foreclosure practices loom on the horizon, which could hamper any progress the two firms have made. Source of article – Economic effect of biking vs. driving is astounding, experts say by MoneyBlogNewz.
Fannie and Freddie hoping to get more loans
Lots of bailout money went to Freddie Mac and Fannie Mae. They were able to continue business this way. Between the 2 mortgage corporations, $130 billion was lent. This was so the real estate sector wouldn't go under. However, the two toxic corporations are starting to hemorrhage less money, in accordance with ABC. During the last quarter of 2010, the period from October to Dec., Fannie Mae posted a loss of only $2.1 billion and Freddie Mac posted a loss of only $1.7 billion. A $16.3 billion loss from Fannie and $7.8 billion loss from Freddie was reported in this exact same time of 2009. The decreased deficits haven’t stopped the two companies from asking for more loans though. In fact, $500 million from Freddie and $2.6 billion from Fannie have been requested in loans.
Using less of the home loan titans
For decades, Freddie Mac and Fannie Mae have played a crucial role in the real estate industry. The two companies purchase home loans and resell them as investments to be able to free up capital for lenders to lend more mortgages. However, the government is significant about drastically reducing Fannie and Freddie’s involvement in the home loan market, including possibly phasing them out altogether. Treasury Secretary Timothy Geithner has admonished Congress to have a significant plan ready before attempting to vote on anything, in accordance with USA Today. Geithner cautioned House Republicans eager to cut the programs that doing so could have an adverse effect on the real estate industry, including possibly destabilizing the housing finance industry entirely. Geithner has recommended a gradual program as the best course.
Fannie and Freddie expected to get worse
Fannie and Freddie are both anticipated to endure further damage in coming months. Until "robo-signing" cases are solved, many foreclosures can't be completed while about 50 percent of home loans in the United States are owned by Freddie and Fannie while 90 percent were created in the last few years. Whatever reforms take place regarding Freddie and Fannie, Treasury Secretary Geithner expects housing prices to rise just a little bit over the next few years, according to Reuters. He also recommended that given housing conditions over the past few years, home buyers put larger amounts of money down to ensure greater stability.
Information from
ABC News
abcnews.go.com/Business/wireStory?id=12995329&page=1
USA Today
usatoday.com/money/economy/housing/2011-03-01-fannie-freddie-geithner_N.htm
Reuters
reuters.com/article/2011/03/01/us-usa-housing-geithner-idUSTRE72000P20110301?pageNumber=1
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