While Capitol Hill talks about housing finance reform, Fannie and Freddie’s regulator, the Federal Housing Finance Agency, is doing something. They have already repeatedly raised the guarantee fee borrowers pay to insure their mortgages are paid off should they default. Moreover, come 1/14 conforming loan limits for Fannie and Freddie mortgages may be reduced. These efforts are designed to reduce government’s oversized footprint in this market and attract private capital.
Tag Archives: Fannie Mae
Declining Delinquency
Fannie Mae and Freddie Mac report that the rate at which single family mortgages that are three months in arrears or in foreclosure declined to 2.77% and 2.79% respectively in June, down from all-time highs of 5.59% and 4.20% respectively in February 2010. While the rates are down 50% and 33% respectively, at this pace it will, unfortunately, take until 2017 before the rate returns to normal, or about 0.8%.
Losing While Winning
After spending so much to save the banks from collapse the government is now suing them for roughly $30 billion! That’s the amount lost by Fannie and Freddie and attributable to the big banks. Even if these suits have merit, this drama has no winners. If the gov’t wins it still loses as banks will have to come up with billions which will kill earnings, reduce lending, and may push some banks over the edge requiring another bailout!