Archive for the ‘Financial News’ tag
Are Freddie and Fannie Insolvent?
Financial news outlet CNBC was reporting early Thursday that
Freddie Mac and Fannie Mae, the two
corporations around which much of housing recovery has been structured,
may be technically insolvent.
The claim came from William Poole, former president
of the St. Louis Federal Reserve. Poole told Bloomberg News that Congress
should recognize that the two are technically insolvent
and the odds are that the U.S. may have to bail them out. Others
disagreed, saying that there would have to be sudden losses of $40
billion between the two to trigger insolvency.
Even CNNMoney Gets it Wrong [Mortgage Industry Blog]
Chris Isidore, CNNMoney.com senior writer is confused. In his overheated article The Trillion Dollar Mortgage Time Bomb he claims that Fannie Mae and Freddie Mac “back” loans when in fact they serve as clearinghouses. “Backing” implies some sort of insurance or guarantee, like FHA’s. Additionally, he claims that conforming loans are characterized by “large down payments.” In fact, here is the entire ill-considered sentence: “Fannie and Freddie primarily back so-called conforming loans, those made to borrowers with good credit and large down payments.” Then he continues with the florid and frightened prose: “Among the nightmares lurking around the corner for the already battered housing and credit markets would be a meltdown at mortgage financing giants Fannie Mae and Freddie Mac.” God, I’m shaking in my shoes…
When a “senior writer” for a financial news site can’t even get it right it’s no wonder the general public is so confused… This kind of ignorant hysteria is what makes people so afraid of buying homes or borrowing money these days. We can only hope that cooler heads will eventually prevail. CNN should pick up writers like Dan “The Mortgage Reports” Green or Liz Freeman “The Daily Pick” if they don’t have anyone more knowledgeable than this guy on their staff.
