Realtors weigh in on Fannie, Freddie takeover
California trade group cautions about 'short-circuit' in role of GSEs
By Inman News, Monday, September 8, 2008.The U.S. Treasury Department takeover of mortgage entities Fannie Mae and Freddie Mac could "short-circuit" the role of the entities during real estate downturns and lead to higher down-payment requirements and lower home-ownership rates, the California Association of Realtors cautioned in a statement Monday afternoon.
"Without an institutionalized mortgage-backed securities market, mortgage capital will be less predictable and more expensive, and adjustable-rate mortgages could become the standard loan for home buyers, as could higher down-payment requirements," said Joel Singer, executive vice president for the trade association, in a statement.
"The 30-year, fixed-rate mortgage as we know it will no longer be readily available for most home buyers and may effectively disappear. The result could be a dramatic decline in home-ownership rates in California and across the nation."
Singer also stated that the short-term impact of the Treasury Department's move could be positive in calming the market and restoring confidence, but "in the longer term these entities need to fulfill their historic mission" in promoting home ownership and affordability.
Fannie Mae and Freddie Mac account for the "vast majority" of all new mortgages in California, the group noted.
The National Association of Realtors also issued an announcement about the takeover deal on Monday, with NAR President Richard F. Gaylord stating that the mission of Fannie and Freddie "must not be interrupted."
"NAR believes that the announced plan will help restore confidence in the secondary mortgage market. We appreciate the steps taken to calm the market, make mortgages more widely available and protect taxpayers. This demonstrates that the government is clearly committed to keeping the flow of capital uninterrupted, which is crucial to the housing sector and the economy," Gaylord stated.
***
What's your opinion? Leave your comments below or send a letter to the editor.
All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.
You must login or register to post a comment.
Submitted by Steve Simon on September 9, 2008 - 5:02am.
"Short-sellers: Nationalization is likely a victory for many short-sellers who bet against the ability of Fannie and Freddie to rebound from their troubles. Fannie and Freddie shares, already down roughly 90% since October, probably won’t be pretty to look at Monday. But their success won’t be morally complicated: The blame for Fannie’s and Freddie’s troubles fall squarely on their odd structure and the housing crisis, Paulson said in his statement. "
This is a buch of garbage, in my opinion!
The crisis was ignored for a long while (it started while we were climbing!) There was no enforcement in three industries:
Banking, Appraising, and sadly Real Estate...
The bankers made laughable loans (a commission agent buys his fourth property with nothing down and finances the closing costs, no tenants in the other three properties, oh yes, I've seen it!)
The appraiser , in Florida right from the DBPR Attorney's mouth, signs off on an appraisal of a home that he or she appraised, and the home doesn't exisit.
The agent telling flat out stupid people "Price doesn't matter, you're going to flip it anyway..."
No enforcement of current regulation and practices are what contributed to this debacle and these things are still in place!
Changing the leadership of FNMA and or FHLMC will not prevent future problems, nor will it change the currnt sour mindset...
You can read more of my thoughts on my blog (or not)...
Just my thoughts :)
If the answer to a complex problem is very simple, it is usually incomplete...
Steve Simon is the lead instructor at the Steve Simon School of Real Estate www.stevesimon.us
Submitted by Commercial Mortgage Loans - Privately Funded - MasterPlan Capital LLC on September 9, 2008 - 5:30am.
The whole concept of Fannie and Freddie was ill-conceived and destine for failure from the start. A corporation can not act in the best interest of its shareholders and in the best interest of the tax payers at the same time. They should have been either a for-profit company or a government agency, not both.
What a boondoggle. Thank heavens that grown-ups are in-charge at Treasury at this very critical time for our economy. Paulson did what had to be done, he crushed the shareholder, maintaining the necessary moral hazard that must accompany equity investing, he honored all debt that carried any implication of a Government guarantee, maintaining faith in the credit of the United States, and he left the preferred share holders with some hope of profit by only taking 80% of the firms. Whatever you think of Paulson, he did not preside over the creation of this credit debacle, and this (necessary) take out of Fannie and Freddie was masterfully engineered given what he had to work with to accomplish what he had to accomplish.
MasterPlan Capital LLC
Commercial Real Estate Investment Bankers
Commercial Mortgage Loans - Equity Financing - Asset Management
Simple, Online Commercial Mortgage Application - Quick Answers - Fast Closings - Professional Service.
Submitted by Victor Schultz on September 9, 2008 - 6:15am.
Imagine you work in a brokerage of 30 Realtors. One Realtor is losing their home because they bought at the height of the market and closings are off and they are now going into foreclosure.
Joe, your Broker then decides that he will now bail out this "poor" Realtor. He has decided it is not fair that this individual is losing their home so in the goodness of his heart and as the leader of the office, he decides that the other 29 Realtors will pay for it.
The Broker of course will take the credit for saving the individual's property, while paying not one thin dime toward it.
You would be outraged if that happened to you!
Well guess what? That is exactly what did just happen and you are just sitting there as if some rich distant billionaire paid for it, when in actuality....You Did!
It may be better for the real estate "industry", but better for America? I think not!
Victor Schultz
President
VTGlobe
www.vtglobe.com (still in development)
Submitted by chis eliopoulos on September 9, 2008 - 6:43am.
I will go as far to say that balling them out is border line criminal.
All the "experts" are proclaiming that it was necessary to preserve our economic system (yes and the spaceship is parked on the driveway).
This is the excuse for the feds to dip in to our pockets again.
In the late 80s the junk bond "revolution" brought us the catastrophic 90s.In the mid 2000s the "euphoric" Wall Street and banking institutions brought us were we are today.
The government in their wisdom (why do they care we pay any way and we are thankful for it)is using our money and is rewarding criminal practices.
Is this a banana republic or what?
Submitted by Pamela Mackenzie on September 9, 2008 - 8:43am.
First, if the takeover means the demise of the 30-year fixed-rate mortgage, then I think that's alarming. If all the exotic loans out there were fixed-rate instead of adjustable-rate, this credit crisis would be a lot smaller or nonexistent.
Second, I think the takeovers were inevitable, but if we don't learn from our mistakes in this crisis, it will be repeated. The free market isn't enough to solve a mess like this. We need solid legislation, regulation and enforcement. Option ARMS and no-doc loans were totally abused. There should be very clear circumstances under which they are allowed, or they should not be allowed at all.
Pam MacKenzie
Real Estate Editor
The Courier News, mycentraljersey.com
Submitted by Michael Reilly on September 9, 2008 - 9:15am.
So far, teh world markets have given a resounding thumbs up to the Fed's take over of these two giants. Stock indexes are up and mortgage rates are down 1/2 point in some cases. I say, so far so good. I hope this is a turning point.
Michael Reilly, REALTOR
Great Austin Properties, LLC
Website Great Austin Properties
Search Austin Real Estate
Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on September 11, 2008 - 9:06am.
It has all boiled down to one thing: ACCOUNTABILITY (or rather...the lack of).
I still fret with the idea that top brass at major corporations, which are known to have such potential for growth and for calamity are held to such low standards of accountability such that, when things turn sour, we still compensate them as though they've done such a fine job!
I find this absolutely disgusting. How can anybody be compensated for failure?!?!?!
This pattern of encouraging poor performance by not penalizing failure is costing us dearly and will kill the U.S.A. if not corrected.
Tis true that it took the Roman Empire 300 years to self-implode (longer than any other burgeoning economy has ever existed), but we are obviously not fail-proof and will not be as long as we hire failures as consultants (as the Treasury has done with the heads of Fannie and Freddie, even after generously compensating them with a multi-million dollar severance package for driving these companies into the ground!).
In addition, where were those in charge of overseeing these semi-governmental institutions?
There is plenty of blame to go around and this election better get it together as far as how to address these issues, how to stop this pork at top management levels and in public office.
www.MiamiRealEstateKing.com
Certified Distressed Property Expert
Miami-Dade County, Florida.