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Is winding down Fannie and Freddie the best option?

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Mortgage Professional America | 18 Aug 2014, 08:27 AM Agree 0
The government is still diverting all profits from Fannie and Freddie to the Treasury? But is a purely private market the answer?
  • Dave | | 18 Aug 2014, 09:15 AM Agree 0
    Everyone will soon learn that Fannie and Freddie never needed a bailout in the 1st place and all of this was a "cover up" to help out the BIG Banks.
  • Steve D. | | 18 Aug 2014, 11:38 AM Agree 0
    Most people in the mortgage industry want Fannie/Freddie to stay for stability. We know it works.
    Not that it matters but we believe we know better than the politicians.
  • Brian | | 18 Aug 2014, 12:20 PM Agree 0
    Sure we can live without Fannie, just like we can live without electric water and sewer service. Ackman is a genius.
    I'm not surprised to see articles shaking investor confidence in one of the biggest rebound investments in history. STRONG BUY and HOLD FOREVER. This will make for a great book someday.
  • Jim Malloy | | 18 Aug 2014, 01:32 PM Agree 0
    I hope who is suing the Feds can make the argument that a "bail out" once paid back is finished business, the share holders are being stolen from, and the feds need to relinquish their dictatorial power.

    We in the industry do know more than the politicians. One political side wants full privatization, the other political side wants a full government utility, if they work it out after destroying Fannie, they will come up with something similar to Fannie ultimately, but after years of fighting and spending obscene amounts of money.

    Fannie may need some tinkering around the edges but the pols are only destructive fools, but we pay for their foolishness.
  • William Matz | | 18 Aug 2014, 06:28 PM Agree 0
    There a couple of subplots here. The first is the manipulation of FNMA/FHLMC by well-connected political appointees to maximize their bonuses. Well documented by Gretchen Morgenson on "Reckless Endangerment". She estimates that up to 75% of the financial benefit of the "implied government guarantee" was going to F/F execs, not to borrowers. Basically, F/F used the same kind of accounting tricks that sent Enron execs to prison. But political connections prevented any real punishment.

    The second subplot is that F/F was to a large extent a victim of the mortgage crisis. The crisis was initiated by failures of subprime mortgages. The contagion then spread even into performing prime mortgages, such as F/F. The last study I saw was that F/F defaults were only 25% of the rate other mortgages. So even at the height of the crisis F/F mortgages were much less prone to default.

    The real key may well be to find a way to de-politicize F/F.
  • Stanley Cooper | | 18 Aug 2014, 09:16 PM Agree 0
    - The problem about your article and many others, mis leading, one sided, neglegent. Let me educate you topically on a few of the well known factual bullet points to date that you some how missed. FnF were put into Conservatorship (not recievorship, big difference) in 2008, in 2012 when FnF were well on there way to paying back 100% of the original bail out amount Hank Paulson, Tim Gietner and a few other crooked politicians while Congress was on recess in the middle of the night changed the original 2008 10% dividend re payment agreement to a 100% sweep of all FnF profits leaving them to never beable to recapitalize and die a slow death! This was a taking from all shareholders and dis regard for our U.S constitution and rule of law or at least that was the plan but instead the housing market continued to gain steam and FnF to date not only paid back 100% of the original 187 billion in record speed with an additional 30 billion profit on top of for a grand total of 227 billion. Now please use common sense (if you can) Fannie and Freddie have been the back bone to the housing market for well over fifty years successfully securing the American dream for millions of home owners and they like many other financial institutions ran into some financial issues in 2008 because of banks and mortgage lenders greedy mis handling services, hence all the the billions paid and still being paid to FnF in legal settlements (now think: If FnF was the cause to the 2008 melt down wouldn't The Banks being sueing FnF?) The conservertorship needs to end now and shareholders rights and value needs to be restored with just compensation for the illegal taking by our U.S Government and Treasury before any reform can ever be discussed, excepted or be back by private capital.

    I could go on and on but I need to get back to my Mork and Mindy re runs, I really hope you learned something and write an article based on honest facts that give ps a true and accurate picture of why this is being looked at as the greatest hiest in U.S history. Cheers!
  • Richard whitehead | | 18 Aug 2014, 09:35 PM Agree 0
    I'm kind of new to the fannie/Freddie situation but it doesn't seem right or fare that AIG, Bank of America and General Motors plus countless others that received rescue bail out funds and some haven't paid back all the funds they received but some how have been released from conservatorship and Fannie and Freddie have paid back all there bail out plus a huge profit and still being controlled by politicians?? This needs to end before it not only destroys the housing market re bound but faith in capitalism. Kind of makes me sick that this is occurring in The United Staes. God bless America!
  • Richard whitehead | | 18 Aug 2014, 10:33 PM Agree 0
    I'm kind of new to the Fannie Freddie situation, but it doesn't seem right or fair - morally or ethically - that AIG, Bank of America, and General Motors plus many other companies that received rescue bail-out funds, and some - like GM - that haven't even paid back all the funds they received - could somehow have been released from conservatorship. And Fannie and Freddie have paid back all their bailout money plus a huge profit, and they are still being controlled by politicians?? It seems to me this needs to end before it not only destroys the housing market rebound, but confidence and faith in American capitalism. Kind of makes me sick that this is occuring in the United States. God bless America.
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