Saturday, February 1, 2014

changes ahead for Fannie

Change is inevitable for Fannie. But not for the bad.
1. They will have to lower their risk by reducing MBS from their books.
2. They will pay back the treasury for the senior shares by end of this quarter.
3. They will continue the risk sharing for all future bond deals.
4. Congress will have to pass something to show they are doing something.
5. Fannie and Freddie are powerhouses, bigger than Apple or Google or Exxon or Walmart.
6. They will have to reduce their Footprint on the market.
7. They will have to pay for a back up from the US govt for future downward markets or help.
8. They will have to change the way they write down a bad loan so they dont have to incur the loss upfront.
9. They will have to win the court cases to eliminate the govt senior shares off books.
10. The conservatorship will have to end, and Fannie will still be here. Stronger and better.

Dont fear the changes that congress is offering up to look like they are working, there is no Fear from Dems that without fannie would not be able to help Lower middle class get homes. Banks will Never Help for the sake of Helping, Banks want money. Fannie is only tool that Dems and poor state GOPs can use to help their state with housing. Don't forget in a downturn that all banks went running for years from mortgages and the PLS market completely Failed. 25% of all PLS market loans went into foreclosure. 5% of Fannies went into Foreclosure. Fannie only really had that problem form the FRAUD the banks sent to fannie as legit loans. They were not legit, far from it. The US banks have paid Billions to fannie for fraud. The bad guys pay.
So no Fear as Fannie and Freddie are THE US MORTGAGE industry, in good and bad times.

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