Filed under: Fannie Mae, Freddie Mac, GSE Bailout — admin @ 12:18 pm
From Business Week:
Freddie, Fannie cut back mortgage fees
By ALAN ZIBEL
WASHINGTON
Mortgage finance companies Fannie Mae and Freddie Mac, seized by the federal government last month, are rolling back fees imposed as they struggled to shore up their finances over the past year.
Freddie Mac said Friday it would not impose a fee increase scheduled to go into effect next month. The announcement followed a similar reversal by Fannie Mae Thursday night.
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Filed under: Fannie Mae, Freddie Mac, GSE Bailout — admin @ 2:32 pm
Fannie, Freddie update from today’s MBA NewsLink:
“The resurgence of Fannie Mae and Freddie Mac’s share prices has been aided by the Treasury’s plan to prop up the companies and the Securities and Exchange Commission’s rule to restrict short selling. However, the moves by the federal government do not solve the underlying problems of Fannie Mae and Freddie Mac, including their low levels of capital compared to other financial firms. Critics of the government-sponsored enterprises have spent the past decade arguing that they need to boost their capital to guard against a collapse, which would cause serious problems for the financial markets. Fannie Mae and Freddie Mac face the challenge of building up their capital reserves, but it leaves them with less money to fulfill their mission to support the mortgage market.”
Read the full article from the Washington Post.
Filed under: Fannie Mae, Freddie Mac, GSE Bailout — admin @ 1:37 pm
Ruth Lee
Bloomberg ran a great article this week giving some industry perspective and feedback on the recent Fannie Freddie Bailout initiative. Bill Gross, founder of Pimco, which has historically been a big buyer of Fannie and Freddie bonds, calls Paulson’s plan “crucial” to the GSEs and the mortgage and investment markets.
“July 21 (Bloomberg) — Bill Gross, who manages the world’s biggest bond fund, said it’s not possible for government sponsored mortgage-finance companies Fannie Mae and Freddie Mac to raise capital without the Treasury Department’s support.
“Let’s be blunt: to the extent the Treasury suggests they’ll never have to use their authority, that’s a sham,” said Gross of Pacific Investment Management Co. “It’s fallacious to suggest that the agencies could issue capital, preferred stock, without the co-participation of the Treasury. I don’t think that’s possible.”
The article later reports:
“Housing prices will fall another 10 percent to 15 percent over the next 12 months, making it a mistake for policy makers to raise borrowing costs to curb inflation, Gross said. Home prices in 20 cities dropped 15.3 percent in April from a year earlier, according to S&P/Case-Shiller, the most since the group began collecting data.”
Click to read the full article “Pimco’s Gross Says Fannie, Freddie Need Treasury”.
Gross also commented that he considers Fannie and Freddie’s mortgage products to be good investments. To see Bloomberg’s interview with Gross, click here.
Filed under: Fannie Mae, Freddie Mac — admin @ 11:44 am
Ruth Lee
The FRB took giant steps this week to rescue Fannie Mae and Freddie Mac from the current mortgage crisis and ensure the ongoing liquidity of the mortgage market. As the Wall Street Journal reported:
“Treasury Secretary Henry Paulson took the lead in crafting a rescue plan for ailing mortgage giants Fannie Mae and Freddie Mac, a move that appears to have staved off an imminent crisis but one that draws the federal government into an ever bigger role managing the American economy. ”
Read the full article in the Wall Street Journal here.
The MBA sent out a letter to their membership this week outlining the Freddie/Fannie bailout that took place over this week. Here is their summation:
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