Geniuses at Fannie, Freddie need $215 BILLION!

Posted on October 22, 2010

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….“This is sheer genius”

In a bid to stem taxpayer losses for bad loans guaranteed by federal housing agencies, Fanny Mae and Freddy Mac, Senator Bob Corker (R-Tenn) proposed that borrowers be required to make a 5% down payment in order to qualify.  His proposal was rejected 57-42 on a party-line vote because, as

Senator Chris Dodd (D-Conn) explained,”passage of such a requirement would restrict home ownership to only those who can afford it.”

The above genius comment came to me in an email. Source unknown. It ties to this news that came out yesterday:

Fannie, Freddie may need $215 billion more in aid

 U.S. taxpayers could be on the hook for up to another $215 billion in aid to housing finance giants Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) through 2013, their regulator said on Thursday.The companies, which were seized by the federal government in September 2008 to save them from collapse, will likely have total capital needs of between $221 billion and $363 billion through 2013, the Federal Housing Finance Agency estimated.

The estimate includes the $148 billion that the two companies, the largest providers of U.S. home loan funding, have already received in the form of preferred stock purchases by the U.S. Treasury. FHFA projections exceed expectations of analysts at Keefe, Bruyette & Woods, who in August predicted the total would reach “roughly $200 billion” by the end of 2010 before stabilizing.

Fannie Mae and Freddie Mac are at the center of debate as Congress sets to overhaul a U.S. mortgage finance system that contributed to the worst housing crisis since the 1930s. The two companies, whose programs fund the lion’s share of all new home loans, are chartered by Congress but have operated as private, profit-making companies.

Under the existing system, the shareholders of Fannie and Freddie were rewarded during boom times as the companies grew under implicit U.S. support. But weaning the nation from government support will be a daunting task given the heavy reliance of borrowers on funding funneled through the two companies and Ginnie Mae, the government agency that packages bonds backed by government agencies such as the Federal Housing Administration and the Veterans Administration.

MORE…..news.yahoo.com/ Rueters by By Al Yoon

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Posted in: NEWS SOURCES