• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Rose City Realty, Inc.

Mortgage / Real Estate Financing
1055 E Colorado Blvd., Ste. 500
Pasadena, CA 91106-2371
(626) 240-4610

Call Us (626)240-4610

  • Home
  • About
    • Who We Are
    • Preston Howard
    • Speaking Events
    • Testimonials
  • Services
    • Why Call Us?
    • What We Do
    • Case Scenarios
  • One Sheet Info
  • Blog
  • Contact
You are here: Home / Archives for Fannie Mae

Fannie Mae

June 1, 2012 By howardpr Leave a Comment

Fannie Mae is Turning a Corner!!

Fannie Mae is Turning a Corner!

I can’t believe it. After four straight years of billion dollar losses, Fannie Mae reports a $2.7BB profit. Fannie’s kissing cousin–Freddie Mac reported a $577 million profit as well. So, does this mean that the US taxpayer gets paid completely now? The answer is a resounding “no.” However, this day mark a turning point in this nightmare, as it’s the best quarter for the Government Sponsored Entities (GSEs) since being placed on federal life support four years ago. Surprisingly, with the advent of a profitable three months, individuals and institutions across the country and around the world are starting to come to the table with their hands out, and with their great ideas as to what should be done with the now profitable institutions.

First of all, the American taxpayers have their hands out. Through our stored tax dollars, we collectively gave $116BB as a lifeline to Fannie and Freddie. Although the balance was reduced to $93BB, we the tax paying citizens of the United States of America want every penny of profit, as we’re an anti-TARP, anti-bailout country at the moment. As the payback dollars roll in, Democrats in Congress are clamoring for more debt forgiveness as opposed to modifications, as the sentiment is that since Fannie and Freddie are now profitable, they can do more to help the ailing housing industry.

The Obama Administration has contributed to the discussion by requesting that Fannie shoulder greater short term losses to stabilize the housing market and subsidize write downs, particularly since there have been substantial declines in delinquent mortgages, reductions in loan loss provisions, and corresponding increases in the average prices of homes across the country. Despite various requests by taxpayers, President Obama and members of Congress, the current chief of Fannie Mae has his own course that he wants to follow in spite of the pressure. Michael Williams is anti-write down type of guy and completely opposes debt forgiveness. In his opinion, “we’ve got the right tools now . . . principal reduction is not part of it.” Conversely, he feels that was is necessary is to get homeowners “into a payment that they can afford.” There is a broad part of the public that agrees.

By and large, only 10% of all mortgages outstanding are in some form of default, which means that the average mortgagee is current and has never missed a payment. I know many mortgagees that would be irate if “people who never deserved a mortgage in the first place” received a principal reduction. There would be no sense of fairness if those who always pay get stuck and those who can’t pay get a reduction. It just wouldn’t be fair and I believe that Mr. Williams knows this; hence, he has a strong stance against write-downs. Personally, I believe the only thing that Fannie should do is purchase more loans and payback the American taxpayer with the profits.

It never ceases to amaze me how people act when they discover that you have money in your pocket. Everyone wants to come to your door with his or her hand out. This line of thinking also applies to GSEs. The first minute they turn the corner and show some profit, bureaucrats want to take the excess and use it for largess, no matter the category that it fits into. For example, if you are someone’s creditor right now, chances are you want your money back–damned be those who have other ideas for your debtor’s recent good fortunes. You’re owed the money, so you should be paid. The same thing applies to Fannie Mae. It’s a well-known and fully publicized fact that Fannie borrowed money from the American people and we deserve to be paid back first. Despite all the other ideas that are being thrown on to the negotiating table, paying back the taxpayer truly is the “right thing to do.” The old adage goes “neither a borrower nor a debtor be.” It should apply to Fannie as it applies to you and me.

Preston Howard is a mortgage broker and Principal of Rose City Realty, Inc. in Pasadena, CA. Specializing in various facets of real estate finance, he can be reached at howardpr@rosecityrealtyinc.flywheelsites.com.

 

Filed Under: Uncategorized Tagged With: Fannie Mae

Primary Sidebar

Blog Topics

  • Blogs
  • Featured
  • Mortgage
  • Uncategorized

Archives

In The News

  • New Blogs Coming Soon
  • So When Will Rates Go Up??
  • Why Europe Matters to Your Mortgage (Now)

Footer

Recent Posts

  • New Blogs Coming Soon
  • So When Will Rates Go Up??
  • Why Europe Matters to Your Mortgage (Now)
  • The True Tightness of Residential Finance
  • Oil and Interest Rates

Hot Topics

  • Blogs
  • Featured
  • Mortgage
  • Uncategorized

Search

[footer_backtotop]

Copyright © 2023 · Rose City Realty, Inc · All rights reserved.