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Fannie, Freddie recapitalization would take 20 years -- official

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Mortgage Professional America | 13 Jun 2014, 01:00 PM Agree 0
In an answer to investors who want Fannie and Freddie reprivatized, a Treasury official says that truly rehabilitating the companies would take 20 years -- and in the meantime, taxpayers would be on the hook to bail them out in another downturn
  • Mike | | 13 Jun 2014, 01:15 PM Agree 0
    Really... Miller, "that much of that profit came from legal settlements." = TOTAL BS!!!! Yeah that will fly by the general public, but those in the industry no full well that every single dime of profit goes to the Treasury Dept. Which is what the initial agreement when they took in the bail out monies. Of course they are at risk because they aren't able to save money in their coffers, the damn treasury department is taking it all. Soon they are looking to add, once again, another G-Fee to the damn pricing, which is essentially another tax hike on the middle to lower class, unbeknownst to them. Ignorance is bliss!
  • Jim | | 13 Jun 2014, 02:27 PM Agree 0
    They are obviously not telling the truth. One side wants to go to one extreme, the side wants to go to the other.

    They need to re-privatize FNMA and Freddie (semi-privatize more accurately but to the way they were) with more conservative guidelines and take the politics out if it.
  • Paul | | 13 Jun 2014, 02:29 PM Agree 0
    Another attempt at the democrats trying to take one step closer to communist ideals.
  • George M | | 13 Jun 2014, 02:39 PM Agree 0
    Ms. Miller's comments assume an industry operating at the same level of
    risk in a hyper inflated real estate market. The market is certainly
    not hyper inflated, actually it is probably over deflated with very
    little downside potential and much more upside value potential. That alone
    would change future prospects. However, not only is the steam out
    of real estate values, but problem mortgage products and the markets for
    them have been eliminated. Those risky mortgage types can't be made now,
    no lenders offer them. A third and very important factor is the very
    real and severe tightening of lender underwriting standards.

    Hey White House and Congress, you are still trying to prevent the problems
    of 2006 and 2007. Those problems are like the horse that ran out of the barn
    and escaped never to return.

    Government correction is heavy handed and creates unintended consequences.
    You have no better solution only some kind of reasonable facsimile of FNMA and
    FHLMC. Your solution will be created by poorly informed legislators who cannot
    escape the financial influence of powerful lobbyists. The end result will be
    Son of GSEs, designed by rich interests who seize an opportunity to eliminate
    competition. In the end consumers will have less choice, rich interests will
    become richer and the expense of small business and consumers.

    I guess by now it is apparent that I believe, no I KNOW that the government
    cannot fix such problems. What such measures do is allow legislators a method
    to shower financial favor their financial supporters.

    Please, please, please leave well enough alone!
    weather worn industry veterans who know what needs to be done.

    legislators
    return.
  • George M | | 13 Jun 2014, 02:43 PM Agree 0
    Ms. Miller's comments assume an industry operating at the same level of
    risk in a hyper inflated real estate market. The market is certainly
    not hyper inflated, actually it is probably over deflated with very
    little downside potential and much more upside value potential. That alone
    would change future prospects. However, not only is the steam out
    of real estate values, but problem mortgage products and the markets for
    them have been eliminated. Those risky mortgage types can't be made now,
    no lenders offer them. A third and very important factor is the very
    real and severe tightening of lender underwriting standards.

    Hey White House and Congress, you are still trying to prevent the problems
    of 2006 and 2007. Those problems are like the horse that ran out of the barn
    and escaped never to return.

    Government correction is heavy handed and creates unintended consequences.
    You have no better solution only some kind of reasonable facsimile of FNMA and
    FHLMC. Your solution will be created by poorly informed legislators who cannot
    escape the financial influence of powerful lobbyists rather than by weather worn
    industry veterans who know what needs to be done.

    The end result will be Son of GSEs, designed by rich interests who seize an
    opportunity to eliminate competition. In the end consumers will have less choice,
    rich interests will become richer and the expense of small business and consumers.

    I guess by now it is apparent that I believe, no I KNOW that the government
    cannot fix such problems. What such measures do is allow legislators a method
    to shower financial favor their financial supporters.

    Please, please, please leave well enough alone!

    legislators
    return.
  • JP Sexton | | 13 Jun 2014, 04:45 PM Agree 0
    20 years?? Prior to 2007, FNMA's most profitable year was in the single-digit billions. Yet they have been able to repay the multiple-billions of dollars in less than 5 years! Stand back, let Fannie and Freddie run on today's profits and they will be fully capitalized in no time.
  • Gordon Schlicke | | 14 Jun 2014, 02:09 PM Agree 0
    JP is right! But Democrats don't like the idea of an independent market. They need control because housing is a huge piece of the economic pie and that means only one thing to them: Votes. Fannie and Freddie should be set free. The market will take care of the rest. Don't hold your breath.
  • Popular Economics Weekly | | 25 Jun 2014, 12:57 PM Agree 0
    Fannie-Freddie don't need 20 years to recapitalize...they would recap on their own if Treasury would stop taking all their profits. Their existing preferred stock = $36 billion, so what would happen if their profits flowed back into their coffers...up to 10x, therefore $360B capitalization...that happen very quickly, in other words.
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