After a long hiatus, I am cranking up my writing efforts on Active Rain again. Most of my comments will focus on issues related to foreclosure, shortsales, market conditions and finance having become heavily involved in short sales and loan workout's for clients in the Annapolis, Anne Arundel County and greater Baltimore and Washington Suburban Area over the past year. So please stop by and don't forget to check out my new blog at www.foreclosuredocket.com .
Today, I want to comment briefly on the recent IndyMac collapse, the largest thrift collapse ever (expect more).
And I also want to comment on the hammering of Fannie Mae and Freddie Mac's stock prices and what it means to us in the Real Estate Business.
You have it from no less a source that Chuck Schumer, the Sr. Senator from New York, that Fannie and Freddie will not be allowed to fail.
Although there is little Chuck could do by himself in the short term. On this point, I have to agree. With half of the entire US mortgage market either owned or backed by Fannie and Freddie (that's $5 Trillion with a T), no one, even the most rabid free marketer in Congress or the Administration is going to let them go south.
In any case, you need to separate out the difference in the stock price plunge from how debt investors value Fannie's and Freddies debt which is issued to buy and back mortgages. In fact part of the reason the stocks are gettting hammered, losing almost 50% of their value inside the week (both stocks are now valued at less than 10% of their 52 week highs), appears to be the same reason their debt is not being hammered: Secretary of the Treasury Paulson has publicly stated that he is working on plans to shore up Fannie and Freddie without being (or at least appearing to be) a shareholder bail out.
I think it is a safe bet that The Feds in one form or another will step in as they deem necessary to keep Fannie and Freddie afloat.
What we can expect to come out of Fannie's and Freddie's current problems in the near term are slightly higher mortgage rates. Just what we need, right? Long term effects will depend on how the the current problems are handled.
All the same, Monday's sale of $3 billion sale of short term debt by Fannie is worth watching.
Oh, if you're looking for my brief comment on IndyMac's failure, it's there. Let me repeat: Expect more.
Mike Davis is a Loss Mitigation Specialist with Equity Loss Mitigation, LLC, a firm that specializes in Short Sale Representation, Loss Mitigation and Loan Workouts for borrowers as well as an Associate Broker with Davis-Resnick Group, LLC which is affiliated with Keller-Williams Crossroads in Annapolis, MD.
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