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Fannie Mae and Freddie Mac Get Taken Over by the United States Government Today!

By Scott Gormley

Mortgage and Lending with Oak Valley Mortgage-California Home Loans and Refinancing

September 07, 2008 06:08 AM

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

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Linda M. Cataldo

Dock Street Realty - Myrtle Beach, SC

Beach Destinations Realty Myrtle Beach

This is a very scary scenario...I hope you are just being a bit pessimistic,

Sep 07, 2008 06:10 AM

Rita Bradley

Laguna Hills, CA

Valuation Consultant in Orange County California 949-916-3263

No he's not.

Sep 08, 2008 05:20 AM

Richard Ives

Chicago, IL

Thanks for the post Scott.

Oct 03, 2008 06:59 AM

Anonymous

Ronald B. White

Office or Dallas Federal S & L. Watched the Saving and Loan industry oversight lead to collapse of Mortagage lending as an underwriter of sound home loans. Watched the merger of Fannie Mae and Freddie Mac, again, because of ovesight. These actions resulted in the consolidation of policial power. With this consolidation, it was possible for Congress and Senate to change the underwriting guidelines.

Having written business plans for financial institutions as an added service of my loan underwriting, I could not find a bank that required its customers to have a business plan written.

The roots of how to make insolvent a financial institution began which change in federal guidelines for mortgage underwriting and grew when business loans were made without requiring business plans.

The Reagan Tax Act of 1986 caught thousands of real estate developers and investors flat footed and resulted in massive bankruptcies. Even though my real estate holdings went through Chapter 7 bankruptcy for $600 million, I understood the need for Tax changes.

The only city to survive the Carter recession was Dallas, Texas. I was the director of the Dallas headquarters relocation program which brought $200 billion to the Dallas area during a national economic recession.

Headquarters will survive national recessions. Having developed millions in office properties, having built the map center that was the magnet for hundreds of corporate site teams and fifty-one headquarters advance groups, and having nothing to lose by restoring the keys that cause headquarters to relocate, I am moving ahead with the Texas Productivity Centers. Productivity is the reason for each headquarters to relocate. The abundance of productivity software, internet security software, and the need for performance in a national recession will cause the development of Headquarters Centers which require Productivity Center that has a state chartered bank, a board performance council, a security center wiht software protections and armed guards.

Apr 19, 2009 09:37 AM

Jeff Dowler, CRS

eXp Realty of California, Inc. - Carlsbad, CA

The Southern California Relocation Dude

Scott - good to see you back, even if on;y to report some pretty scary news. THings sure were different when we all statrted with AR.

Jeff

Dec 06, 2009 02:29 AM

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