Posts Tagged ‘Freddie Mac’
Few felt the financially tragic effects of our economic collapse in a way similar to commission-based real estate agents. Many aim to endure the economic storm with hopes of brighter days to come; however, if agents ignore the market shifts, the sun may never shine again. Changes are many and all of different origin, some direct and others indirect; regardless, time to assess what has happened, forecasting what is to come. In doing so, agents will understand the new dynamics, increasing the ability to flourish in the new real estate climate.
I yearned for the exoneration of Fannie Mae and Freddie Mac, but my voice, amongst many others, apparently has fallen by the wayside. I concede that stockholder concerns should, in this case, play second fiddle to the task of fueling America’s mortgage engine, but I still see this as a governmental maneuver to guise lethargy with an appearance of reform. Fannie Mae and Freddie Mac have been delisted from the New York Stock Exchange, now only to be traded over the counter.
They are still the only companies with the tools and resources necessary to make mortgages possible in America, but now it will only be more difficult to hone in on market share value and actually purchase for the observable share price – bigger bid-ask spreads convolute clarity. This will decrease the velocity by which the companies are actively traded, and that may be a positive, as it provides an opportunity for share price to truly represent both companies’ financials, opposed to shear speculation trading affecting price, while others perpetuate mis-pricing by taking advantage of noise traders. I know – playing both sides.
The current financials of both companies are in shambles, but I argue they are so as a result of government influence. Also, they have been working to eradicate poor assets from the balance sheets with government assistance in order to clear space for stronger ones. If done successfully, the two companies will again acquire desirable assets to influence the long-term profitability of the company. Why? They are the only companies capable of actualy influencing mortgage lending in this country, and despite dropping market share value by nearly 40% of each, this may take the undue attention off the companies necessary to remove the names from the political spotlight. Reform will come, company financial strength will follow, and our real estate market will once again have wheels that actually spin. Maintain your faith in our mortgage buddies!
The Rent Lobster
RentPost, LLC
The trend is to leave all fingers pointed to Fannie Mae and Freddie Mac, the two government sponsored companies who repurchase and are in control of nearly 90% of the mortgages in our country. In essence, they are the driving forces behind mortgage lending in this county. However, to blame mortgage repurchasers is a very superficial approach, and shows a very superficial understanding of the economic factors influencing lending and banking. Here’s the true story, and this tale starts in September, 2001, focusing on the actions of the less-than-capitalist aspect of our supposedly capitalist economy.
Okay – it’s time for a look our country’s current political and economic environment, anticipating how they are going to affect YOU as a landlord, tenant, or homeowner in the very near future. It’s a shaky situation that was touched briefly on previously with an article regarding the way Fannie Mae and Freddie Mac operate to facilitate home purchases in this country. However, legislation may be underway that could significantly alter the way Fannie and Freddie conduct business and the way mortgages are issued to individuals. There are three proposed courses of action – I will review each of them with you, and enlighten you on how they will likely effect the real estate market and, more specifically, the renters market.
Be you a seller, landlord, manager, tenant, or investor, it’s a looming thought: “when will the real estate market pick up? Though your reasons to pursue the answer may differ, it is, regardless, a common theme. So, our aim today is to help you grasp the fundamental economics behind the United States real estate market, while displaying the importance of the information to you.
Firstly, let me emphasize that our current economic situation is atypical to anything that most of us have lived through, so it is important to look outside the realm of stock prices when gauging what will happen to the real estate market. Next, it’s important for you to understand real estate’s place in the economy in order to form your future life or business strategies. Let’s get started.
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