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So If Fannie Mae Goes Under. . .

You'll owe twice as much.

Is Fannie Mae holding Sallie Mae hostage?

Thanks PLATO. That's what I expected since my loans were gov subsidized.

Cats and dogs will have to start living together.

... it will snow in hell.

Originally posted by Kidicious
... it will snow in hell. Kid is unfamiliar with Dante's 8th circle............

Here's the lede from the WSJ...

http://online.wsj.com/article/SB1215..._us_whats_news

PAGE ONE

Treasury and Fed Pledge Aid
For Ailing Mortgage Giants
By JAMES R. HAGERTY, DEBORAH SOLOMON and SUDEEP REDDY
July 14, 2008; Page A1

The U.S. Treasury and Federal Reserve, capping a weekend of high-stakes maneuvering, attempted to shore up confidence in Fannie Mae and Freddie Mac by announcing a plan that placed the federal government firmly behind the battered mortgage giants.

In a statement timed to precede the opening of Asian markets Monday, as well as a closely watched auction of debt by Freddie, the Treasury said it plans to seek approval from Congress for a temporary increase in a longstanding Treasury line of credit for the two companies.
[chart]

The Treasury also said it would seek temporary authority so that it could buy equity in either company "if needed" to ensure they have "sufficient capital to continue to serve their mission" of providing a steady flow of money into home mortgages. The plan, which requires congressional approval, also calls for a provision to give the Federal Reserve a "consultative role" in the process of setting capital requirements and other "prudential standards" for Fannie and Freddie.

The Fed's Board of Governors met Sunday in Washington and voted to grant the New York Fed authority to lend to Fannie and Freddie "should such lending prove necessary," the central bank said in a statement. The move would effectively give the two companies access to the Fed's discount window if necessary, providing a backstop in case the firms were to face a short-term funding crisis down the road.

Originally posted by DanS
In any event, it seems likely that Fannie and Freddie will curtail somewhat their buying and guaranteeing of mortgages, one way or another -- by raising prices or having stricter lending standards.

This would be very bad for the housing market. Fannie just completed a major overhaul of its desktop underwiter automated approval software to fix a lot of the stupid approvals it was giving. Just a couple of the new changes include...no FICO scores under 580 and no more approvals at 80% debt ratios just because you have a big balance in your 401K.

It is a tightening in their standards, but most of it is pretty common sense that you wonder why it wasn't done before.

It is a tightening in their standards, but most of it is pretty common sense that you wonder why it wasn't done before. Indeed.

Makes me wonder if it's a lack of proper regulation/oversight.

-Arrian

I have no problem blaming them. I simply wonder whether their failures are in any way unique or unexpected, and whether they might have been prevented or mitigated with better oversight.

I honestly don't know. I wonder.

-Arrian

Fannie has always been known as asset friendly. They have relied on a borrower's ability to liquidate assets in order to meet obligations. As DanS pointed out, this has some serious loopholes for a distressed borrower. Fannie's new Dektop Underwriter 7.0 addresses some of those issues, but Fannie is still pretty asset friendly. Setting a minimum score of 580 is also a pretty smart move. While there are a lot of good loans below that score, they should not be part of what is considered a "prime" portfolio.

The Fed today just released a copy of their proposed rules for subprime lending. This has been much anticipated by both consumer advocates and lenders. I am waiting on my copy to review it, but some of the things I believe it contains are more clear disclosures and a ban on pre payment penalties...Both of which are good things for borrowers.

Originally posted by Winston
I thought we were strictly focused on sexual innuendo.. http://www.discussworldissues.com/fo...lies/frown.gif Well, Apolyton Off Topic has become a haven for lewdness, shameless juvenile sex jokes, and a parade ground for perverts to show off their kinks without inhibition. But we need everybody to pitch in to keep it that way.

They'd never let it go under (5.3 trillion in holdings is huge) and it's easy to extend their loans/bonds.

Originally posted by Oerdin

In a way it is. Financial pr0n. http://www.discussworldissues.com/fo...ilies/wink.gif Oh, I bet after Freddie undergoes some stock inflation, he might have some interest in getting some leverage into Fannie's assets.

Poor Sallie, whose endowment might end up as an aged fail thanks to some bad arrears...

EDIT: pay no attention, read it wrong...

Originally posted by DaShi
Damn it! If the US government hadn't spent so much money on the war and instead gave it to me, we wouldn't be in this mess. Ok, we still would be, but I'd be happy, and isn't that what really matters? Bah! Just go out and borrow $1/3 trillion, like the U.S. did to finance the war.

You'll be just as happy, and you'll never have to pay it back because your army of scumbag lawyers will keep the lenders tied up in court from the rest of your life. http://www.discussworldissues.com/fo...milies/nod.gif