The magic 8 ball is out and the question is on the table, is Fannie Mae going to fail?
Well first of all, Fannie Mae has already failed.
The company is only running due to government subsidies and a takeover. The politically appointed management ran this company into the ground with it’s lending policies over the past 10 years.
So the real question is how long will the government keep pumping money into the system to keep it afloat, and is it worth it in the long run?
Right now it makes sense to keep it going and let the government absorb the losses. The reliance on Fannie Mae and Freddie Mac to provide liquidity to the housing markets is a necessary evil. We have dismantled the previous lending mechanisms so it would crush the housing market.
However, saying this, a prudent government and industry trade group (ie REALTORS) should be driving the adoption, or at least the examination, of alternatives for the marketplace.
Instead, we see the same old, same old status quo.
So expect the losses to continue and the taxpayers to subsidize the housing market another way.
Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion, adding that it also expects the level of multifamily defaults and serious delinquencies to increase further during 2010.
The company also said that there is uncertainty regarding future of business after conservatorship terminated and expect this uncertainty to continue.
The mortgage finance company, which was rescued by the government in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses. via CNBC
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It would be a shame if Fannie Mae would crumble… If the entire banking meltdown was due to mortgage and they got a bailout, why wouldn't one of the biggest government backed mortgage purchasers get a bailout as well?
Sacramento Real Estate
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