Fannie FNMA & Freddie FHLMC Bail Themselves Out
The Nattering One muses... all those realtors, speculators and lenders counting on a FNMA & FHLMC bailout of the jumbo loan market...
better not hold their breath. The GSE's have their own problems to tend to first by re-purchasing $32 billion of their own toxic MBS...
instead of bailing out the jumbo market (over $417K) which constitutes a third of the US mortage market.
Setting the stage for lower prices in California, Florida and Nevada... as former Fed Head Poole echoes one of our frequent natterings,
higher loan limits will only dig the taxpayer a deeper hole....
The companies own or guarantee almost half of the $12 trillion in U.S. residential mortgage debt.
Instead of using powers granted by Congress to buy jumbo loans for the first time.
Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses.
Congress had kept Fannie Mae and Freddie Mac out of the jumbo market to force them to concentrate on low- and moderate- income borrowers.
The loan limit changes place taxpayers at greater risk.
The National Association of Realtors estimated last year that Fannie Mae and Freddie Mac would buy $150 billion of jumbo loans in 2008.
UBS AG analysts now say the amount may be $74 billion; the companies' own projections indicate that they may not even reach that figure.
Freddie Mac said it would purchase $10 billion to $15 billion in jumbo loans and securities in 2008.
Fannie Mae hasn't made any public commitments to buy a set amount of the assets this year.
Since the rule change took effect in March, Fannie Mae has packaged $24 million of jumbo loans into securities,
while Freddie Mac added $220 million. In April, the companies spent more than $32.4 billion to buy their own instruments.
Fannie Mae added $4.05 billion in net purchases of its mortgage-backed securities in April, taking its portfolio to $728.4 billion.
Freddie Mac net purchases were $28.4 billion, bringing holdings to $737.5 billion. Buying existing debt may help prop up prices for the companies' instruments.
William Poole, former St. Louis Fed Head: "The companies' purchases of their own securities are making them riskier
because they retain 100% of the credit and interest-rate exposure on those assets
Any legislation today that simply expands what they do is going in the wrong direction. It's potentially digging the taxpayer in deeper."
Hattip to Bloomberg
better not hold their breath. The GSE's have their own problems to tend to first by re-purchasing $32 billion of their own toxic MBS...
instead of bailing out the jumbo market (over $417K) which constitutes a third of the US mortage market.
Setting the stage for lower prices in California, Florida and Nevada... as former Fed Head Poole echoes one of our frequent natterings,
higher loan limits will only dig the taxpayer a deeper hole....
The companies own or guarantee almost half of the $12 trillion in U.S. residential mortgage debt.
Instead of using powers granted by Congress to buy jumbo loans for the first time.
Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses.
Congress had kept Fannie Mae and Freddie Mac out of the jumbo market to force them to concentrate on low- and moderate- income borrowers.
The loan limit changes place taxpayers at greater risk.
The National Association of Realtors estimated last year that Fannie Mae and Freddie Mac would buy $150 billion of jumbo loans in 2008.
UBS AG analysts now say the amount may be $74 billion; the companies' own projections indicate that they may not even reach that figure.
Freddie Mac said it would purchase $10 billion to $15 billion in jumbo loans and securities in 2008.
Fannie Mae hasn't made any public commitments to buy a set amount of the assets this year.
Since the rule change took effect in March, Fannie Mae has packaged $24 million of jumbo loans into securities,
while Freddie Mac added $220 million. In April, the companies spent more than $32.4 billion to buy their own instruments.
Fannie Mae added $4.05 billion in net purchases of its mortgage-backed securities in April, taking its portfolio to $728.4 billion.
Freddie Mac net purchases were $28.4 billion, bringing holdings to $737.5 billion. Buying existing debt may help prop up prices for the companies' instruments.
William Poole, former St. Louis Fed Head: "The companies' purchases of their own securities are making them riskier
because they retain 100% of the credit and interest-rate exposure on those assets
Any legislation today that simply expands what they do is going in the wrong direction. It's potentially digging the taxpayer in deeper."
Hattip to Bloomberg
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