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07.11.08, 10:22 AM General Topics
10 replies
Pls explain what is going to happen if Freddie and Fanny go under? Don't understand the significance of it, but sounds awful when I read nyt. Thanks! [ Reply | Watch | Flag ]
General Topics 07.11.08, 10:22 AM Flag
 

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it will create quite a ripple in the financial world. [ Reply | More
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General Topics 07.11.08, 10:27 AM Flag
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gee, thats some insightful analysis [ Reply | More
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General Topics 07.11.08, 10:35 AM Flag
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It means that the housing market may lock up even more b/c they aren't going to be able to cover as many loans (right now 50% of loans end up going through them). [ Reply | More
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General Topics 07.11.08, 11:02 AM Flag
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And if the government bails them out, taxpayers will be paying for the mortgage debt. [ Reply | More
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General Topics 07.11.08, 11:58 AM Flag
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not to mention if the govt bails them out, it is going to be with all sorts of added regulation that is going to probably not be great for business. [ Reply | More
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General Topics 07.11.08, 12:05 PM Flag
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Govt will bail out if necessary. If the govt is bailing out iBanks, then they will bail out Fannie Mae & Freddie Mac [ Reply | More
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General Topics 07.11.08, 12:13 PM Flag
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Freddie and Fannie cannot "go under" int he traditional sense - it's not wi provision of their charter. the gov't can step in and take them over however. [ Reply | More
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General Topics 07.11.08, 12:17 PM Flag
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just because they get bailed out doesn't mean that it is not going to have huge effect on ability to get mortgages afterwards. It still is pretty dire either way. [ Reply | More
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General Topics 07.11.08, 12:23 PM Flag
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NP Do you mean that credit will tighten up in a way that is totally different from current standards [ Reply | More
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General Topics 07.11.08, 12:26 PM Flag
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right now, they are still bundling morgages and selling them to investors. If investors decide (which it is starting to look like they are doing) that those morgages that are bundled and guaranteed by Fannie and Freddie have more risk than previously thought, then those investors stop buying or charge more. There isn't much room to maneuver here. If the costs go up too much, then Freddie and Fannie need to fund the mortgages themselves (right now they are involved in 70% or mortgages), and mortgage lending locks up, because they don't have the capital on hand to do that. [ Reply | More
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General Topics 07.11.08, 12:32 PM Flag
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