Today will go down in the history books for years to come, as the day the United States Government stepped in and took over operations of Fannie Mae and Freddie Mac, which hold nearly half of the mortgages in the United States. Treasury Secretary Henry Paulson noted in a press release today that all avenues were looked at and the United States Government's decision to move forward in the manner chosen was the best viable option.
So, who and what does this affect?
The Common Stock Holder
If you own common shares of stock in Fannie Mae (FNM) or Freddie Mac (FRE), your stock will essentially be worthless in the coming days. The after-hours market and opening of Wall Street on Monday morning will rear its ugly head on many a portfolio across the United States.
Every Single United States Taxpayer
Every time you walk or drive by a new foreclosure that hits the market from this point forward, it's a coin flip that your hard earned tax dollars will be used to sustain the losses on that home. A sea of adjustable rate mortgages originated between 2004 and 2007 are still out there. Adjustable rate mortgages which will "reset" to payments that will add to the stress of household budgets across America.
Your November Vote
Billions of dollars in losses are expected on mortgage defaults in the near future. With the Government's Sunday decision, this should now become a core topic of debate within the Presidential Election. I'm interested to hear how McCain and Obama suggest lowering taxes to the American public, while new credible studies suggest 1 out of every 9 homes across the United States is behind on their mortgage payment or currently in a foreclosure. America is facing a large challenge with many variables coming into play. Variables such as:
Increasing Energy Costs
Increasing Food Costs
Increasing Unemployment
Declining Value of the United States Dollar
And Now, Foreclosure Losses Passed Onto the American Taxpayer!
We must challenge our next leader to answer tough questions in an economic climate that could put us back into a "Great Depression".
Other Related Blog:
The Fannie Mae/Freddie Mac Controversy
By:
Scott Gormley
Broker/Owner
Oak Valley Mortgage
Website: http://www.OakValleyMortgage.com
Comments(3)