So Fannie is quite “conservative” with LTV below 80% (95% with PMI), conforming loan and 620 FICO. Even with this relatively strict qualification, Fannie still lost $2B. I was surprised that nobody were talking about what this means for home prices.
I see two problems and none is good for future home prices.
1. The loss is substantial. with 20% cushion, Fannie still lost $2B. It means that home prices have dropped at least 20% nationally.
2. Fannie won’t be able to make more loans because of the losses. Congress may pressure it to make more loans to boost the housing market.
