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FHFA Head Warns Fannie Mae, Freddie Mac May Need Another Taxpayer Bailout
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Yesterday, we learned that Fannie Mae recently rolled out a new program known as “Home Ready,” which would allow borrowers to obtain a 3% downpayment mortgage with no minimum cash contribution.
Now we learn this.
From MarketWatch:
WASHINGTON (MarketWatch) — Fannie Mae and Freddie Mac are at risk of needing an injection of Treasury capital after the latter reported its first quarterly loss in four years, the director of the Federal Housing Finance Agency said Tuesday.
FHFA Director Mel Watt issued a statement following mortgage-finance company Freddie Mac’s $475 million third-quarter loss, its first quarterly loss in four years.
“Volatility in interest rates coupled with a capital buffer that will decline to zero in 2018 under the terms of the senior preferred stock purchase agreements with Treasury will likely make both Enterprises increasingly susceptible to the possibility of quarterly losses that could result in draws going forward,” Watt said.
Freddie Mac said its loss was driven by interest rate changes that soured the value of derivatives it holds.
You really can’t make this stuff up.
* * *
So now The GSEs may need another capital injection from The Treasury (or in other words, you, The US Taxpayer) in order that the least creditworthy can buy unaffordable homes at maximum (infinite) leverage... because it's fair.
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Winning...
"Initiate Dow v-shaped ramp to green Zulu..."
The "Home Ready" program will be followed shortly by Secretary of State Kerry's "Isis Ready" program, soon to be followed by Attorney General Lynch's "Sharia Ready" program. Can't wait.
Where's Angelo Mozillo when we need him?
These fuckers are losing money in the very same business they drove Mozillo out of, and he made a Killing. Incompetence, Deluxe.
3% down really means zero down on the street since they wrap that 3% into the mortgage magically and seldom check your docs carefully.
It's Buuuuyaaaaahhhhh! Taxpayers better grab their ankles again...and stock up on ky.
It´s like the Government knows we are going to be hit by a five mile wide asteroid, so we might as well spend and borrow into oblivion.
What else can explain the madness?
He had to stand before CONgress because...he made money. OMG, WTF, BBQ!!!
Incompetence? No, government intervention. Come on guys, you know that the Treasury has been sweeping all of Fannie and Freddie's profits into the government's coffers since the "bail-out"/confiscation:
"Today's earnings announcement by Freddie Mac reinforces the need for capital at Fannie and Freddie. There will always be down quarters, and Freddie Mac has reported this as an accounting loss, not a reflection of any negative changes to its core business. The fact remains that Freddie Mac has paid back the taxpayers $96 billion after being loaned $71 billion in 2008. It's high time to end the Third Amendment Sweep so that Fannie and Freddie can begin rebuilding capital. This would protect the taxpayer, and it's also the law."
http://www.prnewswire.com/news-releases/investors-unite-freddie-mac-3q-e...
They're already doing Sharia compliant home loans.
america has too many people with no skin in the game.
Funny that metaphor, "skin in the game." In a literal sense, most Americans nowdays have only skin in the game, plus some bones and blubber. What they don't have is any capital in the game.
UMMMMM, Interest rates have NOT changed.
Exactly! Interest rate changes?? What interest rate changes. Truth is this is a money losing badly-managed enterprise, but cannot be killed as it is a democratic sinecure. A lovely proftiable place for losers who cannot make it outside the DP.
I caught that, too. Maybe it's Risk Premiums on the Counterparties with whom they have their Swaps that Changed?
I told them not to use that 1000:1 leveraged interest rate reverse derivative ETF. But would they listen...NOOO!
I'll bet somebody on the other end of that made a killing.
I suppose that no one could've seen this coming, either...
light in tunnel, horns blowing, track screeching, ground shaking, bells and lights at the crossing. What could possibly go wrong?
Dear Citi group. Due to fluctuations in my cash flow,I will not be able to may my mortgage payment this month. Can you bail me out?
How about a bailout from Goldman and BoA?
Seems like its their turn, eh?
communist!
Bought my house at 3.75% in April of 2012 and the rate today is 3.75%
What am I missing here??
Your foreclosure notice. The Post Office probably delivered it to the wrong address.
The bankers and financiers (even with access to 0.01% "money") still cannot make an honest profit.
fuck em. jump fuckers!
PS. My browsers are really having trouble handling all the flash content on this site? Anyone else? Better ideas?
As public servants have said before, what you do is download the free Firefox browser, then install on it the Adblock Plus add-on that squelches advertisements. It really really works!
and ghostery™
..and Ad Muncher
Done, thanks.
what about on idevices? my ipad and iphone constatnly show this site to crash....?
Sometimes Appls have Wurms in them...
SK i agree that the mentally retarded should have the right to post here, buddy-but at first, take your meds and get Moms permission
Tools, addons, and shut down flash, that simple....hope this helps
If you are using Mozilla Firefox (and if you are not I suggest it) go to add ons and search for Bluhell Firewall. It Blocks all the shitty ads on this and any other site but still allows videos like YouTube and on other news websites to play.
This site is an advertisement for adblockers.
take 2 Oxy and an SSRI...stopping reading ZH and be happy
If I had three kids (all daughters of course), a wife, and needed a no-deposit, 100% financed home......I'd fucking shoot myself. There is nothing "happy" about that situation. Just look at that marketing, so detached from reality it makes you want to vomit.
Ah the moral hazard of 30+ years of "let the majority eat cake" monetary policy...
Get long sharecropping and guillotines, still plenty of time to beat the rush!
And pitchforks. Don't forget pitchforks. Pokey.
Just like CONgress, all Frick & Frack really need, is not another bail-out, but rather "a Nuclear Option".
-lol.....
so the fed will raise rates ... right?
when ? A = never....
system needs to explode first... total destruction
Don't worry. Debt limit had just been raised!! Haleluya.. bro!!
The debt limit has been suspended until 2017, after the election.
Which means there is no debt limit until they bring it up again for another vote in 2017.
What's another few trillion anyway.
THe Federal Reserve loves printing money. It's what they do.
why do we even have the necessity of signing contracts and associated documents? everything's free so just do away with all the bullshit
I guess if they pass that bailout legislation, I can stop paying my mortgage, right?
Hey Tyler, you should change the articles picture to a family of illegals.
This all worked out so well the first time they are bringing it back for an oncore. On top of the NINJA autoloans, NINJA student debt and now we are cruising right back into NINJA real estate loans. These people are fatalistic. Maybe the best suggestion for everyone to simply borrow as much as is fiscally possible and wait for it to all blow up and say "No tango dinero."