houserefinancecenter.com Blog

Fannie Mae Dying A Slow Painful Death

November 8th, 2010

Is it time to pull the plug on Fannie Mae? Or should we continue to keep her alive with a new infusion of $2.5 billion? She is asking for $2.5 billion but we know this is a “ballpark” figure and the real number will be around $3.5 billion.

The taxpayers of America deserve a better deal for all the money they have thrown at Fannie Mae. The one glimmer of hope is the profit of $1.1 billion that the Federal government received in the third quarter. The taxpayers bailed out Fannie and Freddie and in return a dividend is received each quarter. My fear is that if the housing market continues its downward spiral, there will be no more dividend payments. Remember that Fannie Mae has lost money in 13 consecutive quarters. The excuse that Fannie gives is that the bad loans of 2005 through 2008 are the problem. Only 57% of the money is recouped on the sale of a house. For example, if the borrower owes $100,000 when they defaulted, only $57,000 is recovered when the house is sold.

Fannie Mae is promising that the portfolio of loan from 2009 onwards is good. Fannie stressed that the underwriting was solid and stringent.

On November 5th, Fannie Mae announced it was launching $7.5 billion new 2 year notes, due December 28, 2012. Why ask the taxpayers for more money when issuing a new note will get the job done?

If Fannie Mae is to continue, it should do so without contributing to the bankruptcy of America.

Related articles by House Refinance Center

Are You Protected When You Buy A Foreclosure?

Preserve Your Home Equity

National Foreclosure Moratorium

How To Obtain A Lien Release

Recasting Is A Great Option

Short Sale? You Need To Sell Fast!

No Cost Refinance

Related articles

• Fannie Mae’s losses like a depressing slow-motion car crash (shortformblog.com)
• Fannie Mae reports another big quarterly net loss (marketwatch.com)

Entry Filed under: Fannie Mae