Insurance Agent Forum

[SportsNut]

Feds Poised for Takeover of Fannie Mae, Freddie Mac

Rumored to happen this weekend; 9/6-7
No real surprise, but this is as significant and unprecedented financial occurance, and haven't seen anything comparable to this since the depression 1929 to 33.

This may have an indirect impact on some insurance company's financial strength, those that deal in credit default swaps, plus those that hold mtg pools and securities. Amazing how they used to be considered to be safe and secure investments.

FOXNews.com - Feds Poised for Takeover of Fannie Mae, Freddie Mac - Politics | Republican Party | Democratic Party | Political Spectrum

[Mr. Bill]

Ugh.

PIMCO - Investment Outlook Bill Gross Sept 2008 Bull Market

[GreenSky]

So, let's see.

The Fed makes cheap money available to banks so the banks take greater risks in offering loans to unqualified borrowers.

Borrowers start to default so property values drop because of a glut on the market.

The private companies that guarantee the loans effectively go bankrupt.

The government (taxpayers) take over the private companies basically bailing out the banks that made the loans based upon the cheap money offered by the Fed.

In order to do this, the govt. will need to put more money into the system.

What the phuck is wrong with this scenario?

Rick

[Mr. Bill]

No kidding. The circle continues. A friend of mine who is a mortgage broker says that there's no problem with 4 different people banding together to get a loan on a house. Welcome to the neighborhood. No maximum on cars, so figure 8+ are moving in to what is supposed to be a "single family residence".

Plus, let's not forget, the borrowers aren't just defaulting because of lower values. They weren't qualified for the loans in the first place. Fannie? Freddie? Oh yeah, they weren't the ones who were making the loans. Meanwhile, all the execs at these crappy mortgage companies are still living in their multi-million dollar mansions. It's the good, pimpin, life!

[SportsNut]

So much for GSE's (Gov't Subsidized Enterprises), such as Fannie and Freddie. Problem is, we are stuck with the concept and business practices, and it will only get larger and dominate financial markets, for better or WORSE.

This is an interesting read on who is involved and how long the problem has been being swept under the rug.

Fannie Mae & Freddie Mac Failure: The Lies, the Cover Ups and the Making of a Disaster | Loan Modification & Home Loan News

[WIN]

As someone who came from the industry I can tell you IMHO we are no where near the bottom of the market. The problem has continued to fester with no real solutions because there are no simple solutions.

As with marketing any product, the market responded to the product being offered...home loans for nearly everyone with a pulse...that was a fact. I don't blame the home owner or the mortgage broker. I do blame Wall Street and the lack of oversight on marketing these blocks of horribly risky loans as safe securities. These people knew better or should have known better.

There is plenty of blame to go around. I'll take my share. I buried plenty of folks in loans they never should have had and I'm none too proud of it. On the front lines I had no idea it would come to a screaching halt like it did and that just about everyone with a subprime loan would be hit hard in one way or the other. Hindsight is 20/20 and it sure looks obvious now.

This problem runs DEEP. If you somehow think that "it's not the taxpayers fault and why do we have to bail anyone out"...I ya. I don't claim to understand who should be bailed out and who shouldn't. What I do know is that we're just seeing the beginning of the real fallout and how this does truly affect all homeowners and may very well affect just about all segments of the marketplace. Someone has got to shore this up in some fashion even if the workout takes 5-10 years.

9% delinquency is a HUGE number that just grew at a record pace.

Just my two cents.

[Charpress]

A good part of the blame goes to the politicians who put some real pressure on the mortgage industry to come up with loans for minorities or risk some more regulation. Remember redlining?

These are the very same politicians who now want to blame the mortgage industry for giving loans to the very same high-risk groups that the mortgage industry was "discriminating against".

Speaking of gloomy, here's a prediction for you that is probably less than ten years out: assuming the Internet exists, the same players here will be talking about the United States defaulting on it's debt and how Treasuries "used to be safe and secure investments."

[TXINSURANCE]

A good part of the blame goes to the politicians who put some real pressure on the mortgage industry to come up with loans for minorities or risk some more regulation. Remember redlining?

These are the very same politicians who now want to blame the mortgage industry for giving loans to the very same high-risk groups that the mortgage industry was "discriminating against".

Are there stats on current defaults by ethic make up?

Is there hard facts that one group (who qualified) defaults higher than another group?

I am well aware of social and economical issues of qualifying, my question is once you have the loan is there hard stats of one group defaulting higher than another?

[lookin4abetterwayinpa]

A good part of this, whether you believe it or not, goes to the way the "younger" people are thinking. I was born in 1975, and my parents, and every other generation before that, knew that you had to have some savings in order to buy a house. Usually 20% sometimes 15% of the toal home value.

Companies, Country Wide in particular, started offering 100%, then 105%, 107%, and finally 125% financing. People thought, fghk it, we will be making better money in 5 years and it will work itself out.

When I was a mortgage broker, I would talk to people every day, who thought that it was unheard of to have a down payment on a home. Just roll it in.

Then, on top of that, we had a slight boom in the housing market. People in Ca. and Fl., in particular, were refinancing with adjustable rate mortgages, and interest only, not too mention negative ams.

I remeber 1 I did, and I told the guy I did not like it, 2.5 mil condo, in Boca, interest only, and I think his payment was under 1k a month. Nothing going to the principal, but he figured he would make it up in a year when he sold it. Did not happen.

Brokers also had appraisers by the balls at one point. Telling them I need 250k for this house, or I will get someone else to do the appraisal, when the house was only worth 185k max.

It will come back around, just not sure when.

[SportsNut]

Originally Posted by TXINSURANCE

Are there stats on current defaults by ethic make up?

Is there hard facts that one group (who qualified) defaults higher than another group?

I am well aware of social and economical issues of qualifying, my question is once you have the loan is there hard stats of one group defaulting higher than another?

I don't think that is the issue, being which social or ethnic group defaulted the most. What is more of an issue is the CORRUPTION within Fannie and Freddie. Here we have two GSE's (Gov't Subsidized Enterprises), who are spending 100's of MILLIONS of dollars of compaign contirbutions and lobbyists, for the simple reason of buying influence. They have top executives who are making 10's of millions of dollars in salary. The problem comes in when the upside of both go to investors and the downside of either or both go to the taxpayer.

The plain and simply cooked the books to hide issues that have been suspect for years to protect this ivory tower for all these execs and lobbyists alike. If there are NOT criminal convictions over what has happened then there is something seriously wrong. But there won't because it would certainly ensnare some of our precious politicians.

It is a sham job, plain and simple. Another disgusting display by our inept fedral gov't. (by those of all political affiliations, bar none).

And this is OLD NEWS... More of the same has happened continued to happen.

Fannie Mae Slammed With $400M Fine, Agency Report Claims Execs Amassed Millions, Manipulated Accounts - CBS News

Fannie, Freddie spent $200M to buy influence - Yahoo! News

[xrac]

Originally Posted by Charpress

A good part of the blame goes to the politicians who put some real pressure on the mortgage industry to come up with loans for minorities or risk some more regulation. Remember redlining?

These are the very same politicians who now want to blame the mortgage industry for giving loans to the very same high-risk groups that the mortgage industry was "discriminating against".

Speaking of gloomy, here's a prediction for you that is probably less than ten years out: assuming the Internet exists, the same players here will be talking about the United States defaulting on it's debt and how Treasuries "used to be safe and secure investments."

I hope you are wrong but you will probably be right.

[somarco]

A good part of the blame goes to the politicians who put some real pressure on the mortgage industry to come up with loans for minorities or risk some more regulation. Remember redlining?

These are the very same politicians who now want to blame the mortgage industry for giving loans to the very same high-risk groups that the mortgage industry was "discriminating against".

Redlining was indeed considered an issue.

Is there statistical data that minorities default more than non-minorities? Possibly. But there is data that those who put little or nothing down have a higher default rate than those who put 10 - 20%+ down. If you look at those who were not creditworthy (by older standards) . . . regardless of skin color . . . my guess is you will find a much higher default rate than the good credit risks.

The folks in Washington started this mess. Now the taxpayer has to bail them out.

Washington is run by idiots, and given the 18% approval rate for Congress, apparently I am not the only one who thinks that way.

And next on the agenda for the American taxpayer . . . a bailout of Chrysler, GM & Ford . . .

[TXINSURANCE]

Chrysler already received a bailout - I say 1 per 100 years.

Although they did pay it back... and early.

Ford's main issue is they are making crap vehicles, horrible. Even GM is "better" although the German and Japanese are running circles around them.

I have a long list of Ford horror stories, like my expedition engine blowing at 40,000 miles and the constant "wind noise" that no one could figure out.

I am glad I am no longer endangering my families safety driving their crap vehicles.

Good ridden's I say... bye bye Ford

[Paradigm]

Originally Posted by TXINSURANCE

Chrysler already received a bailout - I say 1 per 100 years.

Although they did pay it back... and early.

Ford's main issue is they are making crap vehicles, horrible. Even GM is "better" although the German and Japanese are running circles around them.

I have a long list of Ford horror stories, like my expedition engine blowing at 40,000 miles and the constant "wind noise" that no one could figure out.

I am glad I am no longer endangering my families safety driving their crap vehicles.

Good ridden's I say... bye bye Ford

Sad to say I believe this is a take over of these two entities. The shareholders will be stripped of value and they will become government agencies

[GreenSky]

The "Bailout from Hell." Next stop, Ford and GM.

YouTube - Bob Barr on FOX Neil Cavuto 09/08/2008

Bob Barr is the only candidate for president that has constantly opposed a bailout of the housing industry. Both Sen. John McCain and Sen. Barack Obama have endorsed this taxpayer-funded takeover, which only adds to your share of the budget deficit and national debt.


Milton Friedman once said that the American economy is “more than half socialist.” You can’t help but believe that we’ve made that transition with this takeover and the effect it will have on taxpayers.

Rick