Freddie Mac Asks For More Government Help

So far taxpayers have paid out about $170 billion to subsidize Fannie Mae and Freddie Mac. That works out to about $1300 per American. Taxpayers are on the hook for at least another $100 billion in aid over the next three years.

This is money that is highly unlikely to be repaid to the taxpayer.

This is the high cost of government subsidizing activities such as home buying that need no government subsidy.

The Washington Post reports:

The housing market has slowly begun to improve, but has a long way to go before it’s healthy. Many homeowners are still defaulting on their mortgages. Unemployment remains high at 8.3 percent. And the percentage of those who are late by 90 days or more on their monthly mortgage payments has been rising.

Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default, and then sell them to investors around the world. When property values drop, more homeowners default, either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losses.

Fewer foreclosures and delays in foreclosure processing because of a 16-month government investigation into mortgage lending practices had also reduced the companies’ projected losses. But that government probe ended last month with a $25 billion settlement, which might cause foreclosure rates to rise.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
This entry was posted in Banks, fannie mae, Foreclosure, freddie mac, mortgage, Politics, Rates, Refinance and tagged , , , , , . Bookmark the permalink.