Government Take Over of Fannie and Freddie this weekend

Real Estate Agent with BAIRD & WARNER, NAPERVILLE

According to high government sources reported by both the New York Times and the Washington Post late last night the government is planning to take control of both Fannie Mae and Freddie Mac.

This move, which I thought might have happened last weekend, will protect the quasi-governmental agencies while they continue to operate.

According to the NY Times, over 70% of the mortgages written are backed by either Fannie or Freddie. As part of the take over, there will be changes in the operational aspects of the company.

The take over will also wipe out both the common and preferred stock holders. And, as many pension funds held stock in these companies that will make some people very unhappy.

The take over will end up costing the taxpayers lots of money. Expect billions. And, expect our taxes to increase to cover this. But, it will keep the fragile mortgage market together. And, we need that.

Those of you old enough to remember back in the early '90's when the government also did a take over of Long Term Capitol Management, will know that these forced moves insure against greater chaos.

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