Fitch cuts Fannie Mae and Freddie Mac credit rating

Managing Real Estate Broker with ERA American Real Estate

If your interested in this topic on this blog post, you might also want to check out

these two that I have recently written on the topic of #nfa and credit ratings 

I had linked to the news headline from Associated Press so people could read the press release on the topic. I also cited Wikipedia which is a favorite of mine. There are some that would say you shouldn't cite Wiki I would disagree on such well known topics like the great recession and what lead to it happening. 

The thing I would point out about that post is its a short read and gets to the point I feel. Highlights  'It was a shocking abdication of responsibility." I did bold the fact that its noted that credit agencies play a role. 

I would like to point out on this post two things one I mention this years SVB collapse 

"22 of 23 of the analyst as of last Wednesday had a buy rating on the now failed bank."

Secondly I pointed out something that really didnt catch headlines like I think it should have for two reasons one the government is still trying to put in place the full regulations of the law up until 2 months ago from a Dodd Frank bill that was passed when? Why has it taken so long? Who Delayed it and why? 

Ending SEC Reliance on Credit Ratings   June 7, 2023

"As part of enacting comprehensive reforms to the credit ratings system, Congress, in the Dodd-Frank Wall Street Reform and Consumer Protection Act, directed all federal agencies to reduce reliance on and references to credit ratings in agency regulations. Today’s adoption is the Commission’s final step in fulfilling this Congressional mandate." 

The thing that stands out to me about this Fannie Mae downgrade was that they made the announcement not as one rating change as a whole but they delayed and sent separate releases on downgrades to give another cycle in the news on credit impact after downgrading the U.S. debt, It could seem and this is my opinion that this could seem to have been put out to slow the growth of the stock market, but wouldn't that be market manipulation? 

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Brandon Jordan, Realtor,E-PRO,ERA American Real Estate

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Comments (4)

Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse Advisor

I spent many many years working in capital markets- including working in regulatory areas. While I support banks being heavily regulated- it gets to a point where it needs to make sense- and it just doesn't. We did what we always do, tried to find quick fixes in a patchwork of regulations, often times each regulator seeking their own customized data and reporting resulting in a tremendous amount of overlap from one regulatory body to the next. Dodd Frank, Basel III, some others I can't remember- as the years of working in real estate have moved me further and further away from my prior career. One day it's the SEC, the next the Federal Reserve, the day after that it's a European Regulatory body,  CFTC, NFA, etc...all want things their way- and so much of it overlaps with one another (not mixing securities with commodities/derivatives of course). At some point, unless we have comprehensive regulatory reform that properly addresses multiple regulatory bodies- in an intelligent away, the next crisis is going to happen with or without all these regulations.  This is a massive topic- but Fannie and Freddie (as massive as they are) are only a small piece of the big picture. 

Aug 20, 2023 03:54 PM
Brandon Jordan
ERA American Real Estate - Crestview, FL

Thanks for checking out the post and the comment, you would have an interesting take seeing both sides of the transactions. I understand Fannie and Freddie GSE has went down a great deal but they still back roughly 70% of all loans coming to market fair point that this is one in many problems. 

Your response made me think of Coinbase and their struggles with regulation this one interview stood out to me of CFTC commissioner I dont think she is alone with her view 

saying it depends on what the transaction was used for as to an answer on who regulates what, being a response that's acceptable on top of what you mention in your response to further expand complexity/uncertainty without clarity.  

The offshore of business in defi has already begun with decentralized exchanges and chains starting due to our elected officials but that's the system not always the wisest get elected, they normally go for the private money. 

Aug 20, 2023 08:15 PM
Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse Advisor

Brandon Jordan I am personally staying away from cryto for a while longer as the volatility, volume of sheer speculators, etc. Let the day traders speculate. At some point the system will become stable enough for me to consider investing- but that is a while off the horizon. 


These are products that truly require significant regulation. The challenge is that depending on the product- it could be a security and/or it could be a currency/commodity- falling into both SEC and CFTC- and obviously this is a battle. I am no fan of the CFTC, as they stole the training materials I created at CME group (and was informed as a regulator- they could use these materials in house- but they didn't even have the courtesy to even consult with me- I found out because it's a revolving door working at banks, exchanges and regulators). But I do see some of these products as currencies/commodities/futures products and others as securities - so it requires collaboration to come up with a smart regulatory framework.  


As for Fannie/Freddie- they are causing all new problems in my market as a result of their changes that went into effect as of July 5th- a response to the Miami Surfside collapse. A lot of our condos here hold special assessments rather than have a reserve as special assessments can add to your basis while common charges (sort of similar to HOA fees) don't. The agency rule changes amount to a dramatic financial response without a formal heads up especially when you consider we have building facade inspections required every 5 years with mandatory repairs identified by these inspections - while places like Miami didn't. Anyone seeking financing in the next year or so in Manhattan (which is largely all cash sales) are in for a wild ride as buildings adjust.

Aug 20, 2023 10:13 PM
Brandon Jordan

Sad to hear the agency would steal your material we like to think stuff like IP and business trade materials are only taken from citizens in China and dictator lead countries.


I have been asked by large financial institution associations to help with crafting foreclosure material and courses I understand how much time and detail can go into such things. I ask what compensation was, they expected it to be created for free and the benefit would be I could advertise that I contributed in creation, so cant say I am ask shocked as most might be to hear such a thing. 


The market in Florida on our insurance has been impacted  a great deal too with the tragedy of the condo collapse with insurers pulling out of Florida and doubling of rates year over year its really out of control. 

Aug 21, 2023 10:04 AM
Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse Advisor

It's not just Florida that are being impacted with insurance issues. While pulling out of markets is currently only impacting a few states- the issue of insurance rates doubling or tripling is something we have experienced in NY as well. 

While I initially started my career in finance out of college in traditional financial positions- I eventually wound up in Learning and Professional Development- creating training departments/infrastructure as well as course design and occasionally even course delivery.  Yeah, I know what you mean about being asked to work for free or at a deeply discounted rate. I worked for a training consultancy where a college asked us to design and deliver training for the technology on a mock trading desk. They had all premium equipment and software- but they wanted the training deeply discounted. We had considerable experience training people on many of the trading floor software and equipment- but it's not something we could afford to offer deeply discount training and ultimately passed on the project.   

Foreclosure here is very complicated. Last year I finally completed a common charge foreclosure lien as condo board President. The owner defaulted in June 2009- and we finally completed the sale of the property May 2022- just a few weeks shy of 13 years. I would not want to create training for free considering all the quirks that our laws allow for- it's a lot of time to create materials with the considerable variables. Instructional Design- I charge $500/hour and $1,000/hour for course delivery- though I have moved on and don't actively seek this business anymore. 

Aug 21, 2023 10:47 AM