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Which is not true... It was all on the Dems who caused this.. Mainly Barney Frank who said there was nothing wrong with Freddie Mac or Fannie Mae
McCain, Bush tried to warn country about Fannie and Freddie, Dems called it "fear mongering"
The government-controlled company said Tuesday that it lost $7.6 billion in the third quarter. Low mortgage rates reduced profits and declining home prices caused more defaults on loans it had guaranteed. The government rescued Fannie Mae and sibling company Freddie Mac in September 2008 to cover their losses on soured mortgage loans. Since then, a federal regulator has controlled their financial decisions. Taxpayers have spent about $169 billion to rescue Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates that figure could reach up $220 billion to support the companies through 2014 after subtracting dividend payments. Fannie has received $112.6 billion so far from the Treasury Department, the most expensive bailout of a single company.
Michael Williams, Fannie's president and CEO, said Fannie's losses are increasing for two reasons: Some homeowners are paying less interest after refinancing at historically low mortgage rates; others are defaulting on their mortgages. "Despite these challenges, we are making solid progress," he said. For example, Fannie's rate of homeowners who are late on their monthly mortgage payments by 90 days or more has decreased each quarter since the beginning of 2010, he said. When property values drop, homeowners default, either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losses.
Fannie said lower mortgage rates contributed to $4.5 billion in quarterly losses. While those losses are large, they are temporary and should ease in future earnings reports, said Mahesh Swaminathan, mortgage strategist at Credit Suisse. "They are accounting losses on their books rather than economic losses," he said. Fannie's July-September loss attributable to common shareholders works out to $1.32 per share. It takes into account $2.5 billion in dividend payments to the government. That compares with a loss of $3.5 billion, or 61 cents per share, in the third quarter of 2010. Last week, Freddie requested $6 billion in extra aid the largest request since April 2010 after it reported losing $6 billion in the third quarter. Washington-based Fannie and McLean, Va.-based Freddie own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year.
Fannie and Freddie buy home loans from banks and other lenders, package them with bonds with a guarantee against default and sell them to investors around the world. The companies nearly folded three years ago because of big losses on risky mortgages they purchased. The Obama administration unveiled a plan earlier this year to slowly dissolve the two mortgage giants. The aim is to shrink the government's role in the mortgage system, remaking decades of federal policy aimed at getting Americans to buy homes. It would also probably make home loans more expensive. Exactly how far the government's role in mortgage lending would be reduced was left to Congress to decide. But all three options the administration presented would create a housing finance system that relies far more on private money.
Fannie Mae Asks Taxpayers for Another $7.8B | CNSnews.com
There might yet be another casualty in the real estate market: the Federal Housing Administration. With home prices still seeking their bottom, the federal agency that insures more than $1 trillion in mortgages faces a nearly 50% chance that it could need a taxpayer bailout next year, according to a government report released Tuesday. If the housing market fails to rebound next year, the FHA would need as much as $43 billion from the U.S. Treasury to stay afloat, the report said. That would add to the combined $150 billion already spent to rescue seized housing finance giants Fannie Mae and Freddie Mac.
The FHA's projected losses on loans made mostly before 2009 continue to increase, eating away its cash reserves. The agency is dangerously close to being in the same dire position as many homeowners upside down on its housing finances. "They have no margin for error right now," said Richard Green, director of the USC Lusk Center for Real Estate. Home prices in major U.S. cities rose for five straight months through August, when they ticked up 0.2%, according to Standard & Poor's/Case-Schiller Index. But many analysts predict troubles ahead as foreclosure activity continues to rise, particularly in hard-hit regions such as Southern California.
The median sale price for Los Angeles and Orange counties was $270,000 in October, down 3.6% from September to the lowest level since January, San Diego real estate information service DataQuick reported Tuesday. The drop was triggered by a decrease starting last month in the size of mortgages that are guaranteed by the FHA, Fannie Mae and Freddie Mac, part of an effort by Washington to start pulling back government support for the housing market. But some lawmakers complained that the market in Los Angeles and some other high-priced areas remained too fragile to stand on its own. Pushed by a bipartisan group of California lawmakers, Congress is close to restoring the higher loan limit through 2013, but only for FHA-insured loans.
A provision to raise the limit back to $729,750 in high-cost markets from $625,500 is part of a budget deal the House and Senate probably will vote on before Thanksgiving. But Tuesday's report on the FHA makes approval of that provision less certain. "In light of this bleak outlook for the FHA, it makes no sense to increase the size of loans the FHA can insure," said Rep. Scott Garrett (R-N.J.), chairman of the House subcommittee that oversees Fannie and Freddie. The agency, created during the Great Depression to help revive a devastated housing market, has never required taxpayer assistance. It has been playing a major role in the housing market since the subprime housing bubble burst four years ago, and most of its losses have come from loans made before early 2009.
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Susan McFarland received $1.7 million for joining the mortgage giant that continues to lose billions of dollars after three years in government conservatorship, according to a draft report from the House Oversight and Government Reform Committee, which is holding a hearing into compensation practices at Fannie Mae and Freddie Mac Wednesday. Fannie provided the sign-on bonus to offset compensation McFarland forfeited by leaving an executive position at Capital One, according to a Securities and Exchange Commission filing in June. In addition to the signing bonus, McFarland got a compensation package worth as much as $3.2 million.
This is a standard approach to these situations in the financial services industry, where many executives receive equity grants as part of their compensation, said Fannie spokeswoman Amy Bonitatibus. It is not reasonable to expect executives to give up equity value they would get by staying at their current job to join us. News of McFarlands signing bonus comes after POLITICO reported that the top five executives at Fannie and Freddie received combined bonuses of $12.79 million last year, in part for a mortgage modification program largely considered to be a disappointment.
The Federal Housing Finance Agency holds final approval for compensation packages at Fannie and Freddie, not Obama administration officials. These entities are independent and therefore they are independent decisions, press secretary Jay Carney said earlier this month. The White House is not involved, and nor should it be. Thats appropriate.
But committee chairman Rep. Darrell Issa (R-Calif.) says its a contradiction for Obama to have chastised Wall Street bankers for bonuses while not seeking to curb compensation at Fannie and Freddie. While the Obama administration wants to pay senior officials at Fannie and Freddie like bank executives, the federal government has plenty of employees at the Department of Housing, Treasury, and other agencies who work to advance the presidents policies for far less, Issa said before Wednesday hearings about the bonuses. The administrations case for these exorbitant payments is based on highly dubious assumptions.
Read more: Fannie CFO?s signing bonus: $1.7 million - Josh Boak - POLITICO.com
Which is not true... It was all on the Dems who caused this.. Mainly Barney Frank who said there was nothing wrong with Freddie Mac or Fannie Mae
McCain, Bush tried to warn country about Fannie and Freddie, Dems called it "fear mongering"
