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Fannie Freddie Bailout Reviews

Atlanta Real Estate News | Email the Author: Brad Nix, Managing+Broker
Posted: September 11th, 2008
Category: Real Estate Finance

Thanks to Bob at Get Home Denver for the video tip.

We all have heard about the Fannie-Freddie Bailout, but what does it mean?

Benefits of Fannie Freddie Bailout

Jeff Corbet of AgentGenius listed 5 potential benefits of the bailout:

Lender balance sheets will be cleaned up and thinned out.
Mortgage rates and fees should get cheaper as a result.
Mortgage paper will be turned into Federal paper, establishing much needed confidence from foreign investors. Its a global market, keeping foreign investment money flowing through our economy is vital to its existence in 2008 (and going forward).
Federal paper will allow borrowers to potentially ‘work out’ their delinquent loans with far more flexibility than they could with lender owned mortgage paper.
Reduction of Wall Street volatility in what has historically been a stable segment of the bond market. Consumer confidence needs to be restored to the mortgage market, volatility and consumer confidence usually don’t coincide with each other.

Wall Street

Dan Green of The Mortgage Reports had this to say about how Wall Street views the move…

“For years, Wall Street endured Fannie Mae’s accounting issues, leadership scandals, and weak balance sheets, knowing that the mortgage group’s parent was just a cab ride away. Wall Street harbored a deep-seated belief that should things get really bad for Fannie Mae, the government would step and take over. And, that’s exactly what happened.”

Then the Wall Street Journal says intervention ain’t what it used to be:

“Government intervention is losing its market mojo.

The one-day stock rally sparked by the rescue of Fannie Mae and Freddie Mac was quickly erased Tuesday, drowned out by fresh worries about Lehman Brothers Holdings.”

Do you have any thoughts on the take over?

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