Fannie Mae Wants $8.4 Billion More in Fed (taxpayer) Aid--Portends More Housing Market Troubles

[amborin]

Fannie Mae Wants $8.4 Billion More in Federal Aid

10 May 2010


Fannie Mae announced a $11.5 billion quarterly loss Monday. The mortgage giant's continued poor performance has added urgency to the question of how – or whether – it should be saved.

The loss of $11.5 billion for the first quarter of 2010 is a sign that troubles in the US housing markets continue – and a reminder that Congress still needs to sort out the future of the troubled "government sponsored enterprises" like Fannie Mae.
Fannie and its sibling organization, Freddie Mac, own or guarantee a large share of US mortgage loans. The question for the future is whether – or how – they can do that without putting US taxpayers at risk during market downturns.

Treasury Secretary Tim Geithner recently acknowledged the dilemma – and that the Obama administration has not yet proposed a solution.
"The housing finance system clearly cannot continue to operate as it has in the past," he told the House Financial Services Committee in March. But "designing and implementing practical solutions ... will not be simple."

snip

Both corporations essentially failed and were taken into a government conservatorship. Taxpayers are paying a price, as the Treasury pumps in money to make sure that losses don't push Fannie and Freddie into a position of negative net worth.
Along with announcing its quarterly loss, Fannie Mae said Monday that it was calling for $8.4 billion in support from the Treasury, because of its first-quarter performance resulted in a net-worth deficit. The news organization ProPublica, in its running tally of federal bailouts, currently puts total government aid for Fannie and Freddie at $144.9 billion since the conservatorship.

http://www.truthout.org/fannie-mae-wants-84-billion-more-federal-aid59377

[amborin]

1. Lost Decade Ahead for Homeowners:

A "Lost Decade" Ahead for Home Owners -- Just So Banks Won't Take a Bigger Hit on Their Garbage Mortgages

May 11, 2010

In its effort to rescue the housing market, the Obama administration has created a Frankensystem which neither allows the market to clear nor solves the intractable social problems of lost equity and foreclosure. Obama needs to step-back and take a look at the mess he's made by following the advice of financial industry reps and bank lobbyists. Housing is in a shambles. The market is presently stitched together with buyer-assistance programs, loan modifications programs, new homebuyer subsidies, foreclosure abatement programs, principal reduction programs, historic low interest rates, "easy-term" financing, and government-backed loans. It's a veritable dog's breakfast of inducements, giveaways and bandaids all designed with one purpose in mind; to keep the banks from taking a bigger hit on their garbage mortgages. To get an idea of how desperate the situation really is; take a look at this eye-popping article in the Wall Street Journal:

"The U.S. government's massive share of the nation's mortgage market grew even larger during the first quarter. Government-related entities backed 96.5% of all home loans during the first quarter, up from 90% in 2009, according to Inside Mortgage Finance. The increase was driven by a jump in the share of loans backed by Fannie Mae and Freddie Mac, the government-owned housing-finance giants....

snip

http://www.alternet.org/story/146824/a_%22lost_decade%22_ahead_for_home_owners_--_just_so_banks_won%27t_take_a_bigger_hit_on_their_garbage_mortgages

[greencharlie]

2. part of me wants to LMFAO... and then cry. nt