Fannie Mac Freddie Mae , Who Knows

[thundley4]

Fannie to U.S.: We need another $15.3 billion
   
Source: CNNMoney.com

By Tami Luhby, senior writer
February 26, 2010: 6:35 PM ET


NEW YORK (CNNMoney.com) -- Battered by the housing crisis, mortgage finance company Fannie Mae said Friday that it needs another $15.3 billion in bailout money from the federal government.

Fannie Mae (FNM, Fortune 500), which is controlled by the government, reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department. This is down from $25.2 billion a year earlier and $19.8 billion in the third quarter.

For 2009, however, Fannie's losses ballooned to $74.4 billion, compared with $59.8 billion in 2008.

Fannie and its smaller sibling, Freddie Mac, are the primary source of mortgage funding in the nation. They bundle home loans that conform to certain standards into securities, attach a guarantee that they will be paid, and sell them to investors. The process gets money back to the banks and other lenders that originate the loans.

Read more: http://money.cnn.com/2010/02/26/news/companies/Fannie_m... /

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4285481

begin_within   (1000+ posts)           Fri Feb-26-10 09:53 PM
Response to Original message
1. Yeah, so what'd ya do with the last bailout, Fannie?
   
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jimshoes   (1000+ posts)             Fri Feb-26-10 09:57 PM
Response to Original message
2. Oh yeah,
   
Me too. 
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optimator (510 posts)           Fri Feb-26-10 09:58 PM
Response to Original message
3. Obama already gave them a blank check in december
   
so, they WILL get any amount they ask for.
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proudohioan   (485 posts)           Fri Feb-26-10 10:01 PM
Response to Reply #3
6. Hey, you're right; I remember reading about that as well!
   
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RKP5637   (1000+ posts)           Fri Feb-26-10 09:58 PM
Response to Original message
4. Unbelievable! I would like to get in the bailout line! n/t
   
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proudohioan   (485 posts)           Fri Feb-26-10 10:00 PM
Response to Original message
5. Yeah, Fannie, let me tell YOU about MY losses since 2006.......
   
and scores of other folks losses as well!

Where the **** is OUR bailout?????

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sarcasmo (1000+ posts)             Fri Feb-26-10 10:01 PM
Response to Original message
7. Give them money once they come back begging for more.
   
I fear we have not hit bottom.
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leftstreet   (1000+ posts)           Fri Feb-26-10 10:01 PM
Response to Original message
8. WHERE IS OUR BAILOUT !?
   

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Skittles   (1000+ posts)           Fri Feb-26-10 10:04 PM
Response to Original message
9. **** 'em
   
let 'em go down
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Jamastiene   (1000+ posts)             Fri Feb-26-10 10:05 PM
Response to Original message
10. Like rats that have learned which lever to press to get the treats. n/t
   
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BlueJac   (1000+ posts)           Fri Feb-26-10 10:47 PM
Response to Original message
11. Suck us off first........
   
then I will say no ****ing way,,,,,,ask your daddy Obama!!! He will cough it up for ya!!!
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Hawkeye-X   (1000+ posts)             Fri Feb-26-10 10:50 PM
Response to Original message
12. US taxpayer to Fannie - **** NO.
   
LET IT FAIL

LET IT FAIL

DUmmies didn't catch that part about Fannie being controlled by the Government.  I wonder who Fannie Mae and Freddie contributed to for elections in the past?

[SSG Snuggle Bunny]

B-b-but...

...those are loans to low-income people and minorities!!1!!11! It's criminal/racist to even suggest they be required to repay the loans.

[The Village Idiot]

Let it fail.

I guess the dummies have come around to agreeing with us on that one.

[Carl]

MrMickeysMom  (1000+ posts)          Sat Feb-27-10 03:08 AM
Response to Original message
16. ... Or WHAT?
   ... We should have nationalized your Godamned ass the first time, you financial terrorists!

Lurking DUmmies,from your own favorite source...
http://en.wikipedia.org/wiki/Fannie_Mae

History

Fannie Mae was established in 1938 [8] as a mechanism to make mortgages more available to low-income families. It was added to the Federal Home Mortgage association, a government agency in the wake of the Great Depression in 1938, as part of Franklin Delano Roosevelt's New Deal in order to facilitate liquidity within the mortgage market. In 1968, the government converted Fannie Mae into a private shareholder-owned corporation in order to remove its activity from the annual balance sheet of the federal budget.[9] Consequently, Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae). In 1970, the government created the Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, to compete with Fannie Mae and, thus, facilitate a more robust and efficient secondary mortgage market. Since the creation of the GSEs, there has been debate surrounding their role in the mortgage market, their relationship with the government, and whether or not they are indeed necessary. This debate gained relevance due to the collapse of the U.S. housing market and subprime mortgage crisis that began in 2007. Despite this debate, Fannie Mae, as well as Ginnie Mae and later Freddie Mac, have played an integral role in increasing home ownership rates in the U.S. to among the highest in the world.[citation needed]
[edit]
Contributing factors and early warnings

In 1977, the Carter Administration and the United States Congress passed and signed the Community Reinvestment Act of 1977, or CRA , designed to boost lending in inner cities with areas of extreme blight by forcing area banks to open new branches in these areas and to have a certain percentage of their lending portfolio of small business loans and home mortgages located in these areas. Failure to maintain this ratio would result in the banks being prevented from opening branches in other areas that were not distressed.

In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the CRA of 1977.[10] Because of the increased ratio requirements, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans. Shareholders also pressured Fannie Mae to maintain its record profits.[10]

In 2000, because of a re-assessment of the housing market by HUD, anti-predatory lending rules were put into place that disallowed risky, high-cost loans from being credited toward affordable housing goals. In 2004, these rules were dropped and high-risk loans were again counted toward affordable housing goals.[11]

The intent was that Fannie Mae's enforcement of the underwriting standards they maintained for standard conforming mortgages would also provide safe and stable means of lending to buyers who did not have prime credit. As Daniel Mudd, then President and CEO of Fannie Mae, testified in 2007, instead the agency's underwriting requirements drove business into the arms of the private mortgage industry who marketed aggressive products without regard to future consequences: "We also set conservative underwriting standards for loans we finance to ensure the homebuyers can afford their loans over the long term. We sought to bring the standards we apply to the prime space to the subprime market with our industry partners primarily to expand our services to underserved families.

"Unfortunately, Fannie Mae-quality, safe loans in the subprime market did not become the standard, and the lending market moved away from us. Borrowers were offered a range of loans that layered teaser rates, interest-only, negative amortization and payment options and low-documentation requirements on top of floating-rate loans. In early 2005 we began sounding our concerns about this "layered-risk" lending. For example, Tom Lund, the head of our single-family mortgage business, publicly stated, "One of the things we don't feel good about right now as we look into this marketplace is more homebuyers being put into programs that have more risk. Those products are for more sophisticated buyers. Does it make sense for borrowers to take on risk they may not be aware of? Are we setting them up for failure? As a result, we gave up significant market share to our competitors. "[12]

In 1999, The New York Times reported that with the corporation's move towards the subprime market "Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s."[13] Alex Berenson of The New York Times reported in 2003 that Fannie Mae's risk is much larger than is commonly held.[14] Nassim Taleb wrote in The Black Swan: "The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deem these events 'unlikely'".[15]

In 2002, President George W. Bush signed the Single-Family Affordable Housing Tax Credit Act. Dubbed "Renewing the Dream," the program would give nearly $2.4 billion in tax credits over the next five years to investors and builders who develop affordable single-family housing in distressed areas.

On September 10, 2003, the Bush Administration recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis. Under the plan, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae. The new agency would have the authority, which now rests with Congress, to set capital-reserve requirements for the company and to determine whether the company is adequately managing the risks of its portfolios. The New York Times reported that the plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac is broken. The Times also reported Democratic opposition to Bush's plan: "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." [16]

On December 16, 2003, President George W. Bush signed the American Dream Downpayment Act, a new program that provided grants to help home buyers with downpayment and closing costs. The act authorized $200 million dollars per year for the program for fiscal years 2004-2007.

President Bush also tripled the funding for organizations like Habitat for Humanity that help families help themselves become homeowners through 'sweat equity' and volunteerism in their communities. Substantially increasing, by at least $440 billion, the financial commitment made by the government-sponsored enterprises involved in the secondary mortgage market specifically targeted toward the minority market.

On January 26, 2005, the Federal Housing Enterprise Regulatory Reform Act of 2005 (S.190) was first introduced in the Senate by Sen. Chuck Hagel.[17] The Senate legislation was an effort to reform the existing GSE regulatory structure in light of the recent accounting problems and questionable management actions leading to considerable income restatements by the GSE's. After being reported favorably by the Senate's Committee on Banking, Housing, and Urban Affairs in July 2005, the bill was never considered by the full Senate for a vote.[18] Sen. John McCain's decision to become a cosponsor of S.190 almost a year later in 2006 was the last action taken regarding Sen. Hagel's bill in spite of developments since clearing the Senate Committee. Sen. McCain pointed out that Fannie Mae's regulator reported that profits were "illusions deliberately and systematically created by the company's senior management" in his floor statement giving support to S.190.[19][20]

At the same time, the House also introduced similar legislation, the Federal Housing Finance Reform Act of 2005 (H.R. 1461), in the Spring of 2005. The House Financial Services Committee had crafted changes and produced a Committee Report by July 2005 to the legislation. It was passed by the House in October in spite of President Bush's statement of policy opposed to the House version.[21] The legislation met with opposition from both Democrats and Republicans and that point and the Senate never took up the House passed version for consideration after that.[22]

Suck on it DUmmies

[dandi]

Lurking DUmmies,from your own favorite source...
http://en.wikipedia.org/wiki/Fannie_Mae
Suck on it DUmmies

Your post is a prime example of why conservatives are immediately banned from DUmmyland.

Inconvenient facts are considered "disruptive" to the board.

[USA4ME]

Let it fail.

I guess the dummies have come around to agreeing with us on that one.

I don't. It needs to get back to doing what it did best; financing for people who had good credit via being able to budget, making sure they were consistently employed and not job jumpers, and they had adequate reserves in case they needed to get through some hard times.  They don't need to be in the sub-prime business, nor should they have ever been.

.

[debk]

As near as I have been able to figure out....the ONLY homeowners that the lenders are helping ....are those who are applying for loan restructuring BEFORE they get into trouble.

Everyone else is being foreclosed.

Fannie and Freddie are taking bailout money, loaning it out on new loans primarily to first time buyers, and writing off gazillions of dollars on foreclosed loans as asset losses.

[thundley4]

As near as I have been able to figure out....the ONLY homeowners that the lenders are helping ....are those who are applying for loan restructuring BEFORE they get into trouble.

Everyone else is being foreclosed.

Fannie and Freddie are taking bailout money, loaning it out on new loans primarily to first time buyers, and writing off gazillions of dollars on foreclosed loans as asset losses.

That's what makes no sense. People were still losing their homes, but the banks were getting some or most of their money from Fannie/Freddie, yet the foreclosed home sits empty.  It just seems like this was a botched enterprise, that could have been handled better.

[debk]

That's what makes no sense. People were still losing their homes, but the banks were getting some or most of their money from Fannie/Freddie, yet the foreclosed home sits empty.  It just seems like this was a botched enterprise, that could have been handled better.

If the banks work with the homeowner....the bank loses interest money, maybe some on the principal.

If the banks foreclose on the property....the bank is able to take the loss and reduce the banks debt to the IRS.

The banks need to wake up and realize that there are not enough qualified buyers to purchase all these empty foreclosed homes!!

Many areas of the country had a surplus of available homes prior to the housing crash 18 months ago.

Now add in all the foreclosure properties and short sale properties.

The ratio of available properties to "ready, willing and ABLE" buyers are no where near level.

Now add in all the people who are just hoping to hang on to their jobs or are not willing to change their financial status with a different mortgage.....they aren't looking for a new(to them) home. They are staying where they are and if they can, are updating their existing home. Lowe's and Home Depot are doing great because of this.

The whole bailout for the mortgage business was sort of a sham. It's helped the mortgage companies stay alive....but has done little to help the consumer (homeowner).

[BlueStateSaint]

If the banks work with the homeowner....the bank loses interest money, maybe some on the principal.

If the banks foreclose on the property....the bank is able to take the loss and reduce the banks debt to the IRS.

The banks need to wake up and realize that there are not enough qualified buyers to purchase all these empty foreclosed homes!!

Many areas of the country had a surplus of available homes prior to the housing crash 18 months ago.

Now add in all the foreclosure properties and short sale properties.

The ratio of available properties to "ready, willing and ABLE" buyers are no where near level.

Now add in all the people who are just hoping to hang on to their jobs or are not willing to change their financial status with a different mortgage.....they aren't looking for a new(to them) home. They are staying where they are and if they can, are updating their existing home. Lowe's and Home Depot are doing great because of this.

The whole bailout for the mortgage business was sort of a sham. It's helped the mortgage companies stay alive....but has done little to help the consumer (homeowner).

RealtyTrac specializes in these properties.  www.realtytrac.com

[Randy]

I'm actually second guessing buying this house last August. With Odumbass killing off the Space Program the homes here are going to be plentiful and dirt cheap soon. It'll probably be a great time to become a real estate mogul once it all crashes.  

[The Village Idiot]

I'm actually second guessing buying this house last August. With Odumbass killing off the Space Program the homes here are going to be plentiful and dirt cheap soon. It'll probably be a great time to become a real estate mogul once it all crashes.  

Congress is rumbling that they might NOT go along with Bambam on that one

[jukin]

1. Loan money to people that can't pay it back.
2.???
3. PROFIT!

[crockspot]

Nationalize Fannie and Freddie right now!!!!!11111

Oh, wait... nevermind.

[Randy]

Nationalize Fannie and Freddie right now!!!!!11111

Oh, wait... nevermind.

Heyyyyyy maybe they could finance Ocare..... :innocent:

[Randy]

Congress is rumbling that they might NOT go along with Bambam on that one

he should be politically shot between the eyes for it. We have to be able to reach out past LEO. If only to launch DUmbasses into the sun.