That is the question that is being asked over at Smart Money. They have gone through the balance sheet of the public private mortgage guarantor are concerned. Creative accounting and overly positive projections paint a picture that could be far from reality.
This would not be as worrisome but the past history of Fannie Mae has been checkered. Billions of dollars of losses left a mess from the Franklin Raines days and now with the housing situation weakening the risks to Fannie Mae could be real.
In our view, the rapid decline in home prices and soaring level of foreclosures might cause the wave of credit losses to hit far sooner and with greater ferocity than many imagine, potentially submerging the income Fannie is expecting to harvest from volume growth and higher lending fees.
A new phenomenon of widespread negative equity — homeowners owing more on their mortgage than the underlying property is worth — has wrought a sea change in borrower behavior. Borrowers, whether subprime or prime, financially stretched or flush with cash, are walking brazenly from their l obligations in stunning numbers. via SmartMoney.com.
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Although Florida Oceanfront luxury Condos in Sunny Isles show few foreclosures; Value dropped 20%
from 2006 – inluding defaults units in New Constructions
can be bought at below the initial Purchase Price.
Once all New constructions are completed ; Price
per Square feet will rise again
Totally agree with Rita Japhet. I strongly believe, that price
per Square feet will start moving up by the beginning of 2009.
Some of the oceanfront buildings never lost the value and now already show the rise in the price- good example is One Bal Harbour
in Bal Harbour.