As anyone in the Real Estate industry knows, Fannie and Freddie (as are many financial institutions) are going through very tough financial times, both having taken huge quarterly losses yet again.
NEW YORK (CNNMoney.com) -- The good news: Mortgage giant Fannie Mae is taking steps to shore up its finances. The bad news: You're going to pay for it when you take out a mortgage.
Fannie plays a central role in the market for home mortgages by purchasing loans, securitizing them and selling them to investors. In announcing announcing a $2.3 billion loss on Friday, it also said it would make major changes that could have a significant effect on mortgage liquidity and pricing.
The company said it will increase its fees, stop buying certain high-risk loans and charge a higher risk premium for buying loans in the declining market.
- Money.cnn.com
Now that it appears that Fannie and Freddie are beginning to take steps towards fixing some of their deep routed problems resulting from mediocre lending practices/loose guidelines during the real estate boom, is this the signal that they have acknowledged and are addressing ALL of the problems or is this simply an indicator of more problems to come?
Update August 2008: Fannie and Freddie continue to struggle. Their stock prices have continued to plummet and are now sitting at all-time lows.
Update September 2008: Coming soon!
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