Last year, profits of $1.97 billion.
This year (so far) a net loss of $2.3 billion.
So, how bad is it going to get?
As mortgage guarantors, Fannie Mae and Freddie Mac pay out when individuals default on their loans – and there has been a lot of that happening lately.
Last month the federal government approved the financial bailout should Fannie Mae need it. They will need it and the taxpayers will be hit hard.
Although Fannie Mae is now taking steps to correct the situation it is really too late. Here are two steps they are taking to try and right the ship…
- Fannie Mae lowered their dividend payout by 85%
- Fannie Mae will stop purchasing ‘Alt-A” loans (loans where people did not have to prove their income)
Neither will help Fannie Mae currently and in any case, it will most likely cost the taxpayers $10 – 60 billion in what is already a tough economy.
Fine, I suppose this is where you look for some witty insights to my mind. A "bio" of sorts. Here is the deal... I ride motorcycles, smoke cigars, golf, kayak, fly, race my car through the mountains, write (a lot), and travel extensively. I am almost old enough not to care what other people think about me...almost. ~Godfadr
So currently a net loss of 2.3 Billion could translate to between 4 and 25 times the amount of money in corrections???
I’m no economic genius, so you may need to help me out on this math. While we are still seeing foreclosures, the amount has dropped dramatically in the past couple months, at least that was my understanding of the situation.
What, not used to how the government handles money? LOL
The 10-60 is the projected end of the day cost…when everything gets to the light of day.
Actually some have predicted 100 but I don’t think it will get near that. You are right, we are already seeing some improvement (or at least I keep hoping we are).
I just saw on the news last night that foreclosures are up 50% versus last year.
I don’t think we have seen anywhere near the end of this. The BBC reported that it could be closer to 100B. This may be the first time that renting versus buying was a better move.