As IndyMac fights for their lives, Freddie Mac and Fannie Mae face the daunting challenge of raising new capital and a steep drop in their share prices. The federally chartered lending institutions stock prices were hammered yesterday after fears resurfaced over the lending crisis.
One of the strongest warning signs came Monday, when shares of the nation’s most important mortgage companies, Fannie Mae and Freddie Mac, plummeted. After falling almost continuously over the past month, in just one day Freddie Mac tumbled another 18 percent, and Fannie Mae lost 16 percent amid concerns that the companies would need to raise billions of dollars in fresh capital. via the International Herald Tribune.
The market is telling the lending institutions that they think the worst of the housing market has not passed but is yet to come. While we know that the real estate market is not solid yet, signs have been pointing to the market finding a base.
I hope that buyers do not react to this macro news and return to their tentative buying pattern. That would not be good for anyone.
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