Fannie Mae, Freddie Mac Bailout in California – Maybe Not Much Help

[PerryChase]

Tue Apr 17, 12:22 AM ET
“NEW YORK (Reuters) – The chief executives of mortgage finance companies Fannie Mae and Freddie Mac are expected to unveil plans on Tuesday to help subprime borrowers, the Wall Street Journal reported on its Web site. ”

http://news.yahoo.com/s/nm/20070417/bs_nm/fanniemae_freddiemac_subprime_dc

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That’s all well but it might not help California that much.

“Another impediment that can work against bailout efforts is stratospheric home prices. Some of the bailout plans call for loans to be bought up by Fannie Mae (Charts) and Freddie Mac (Charts, Fortune 500), the government-sponsored, mortgage finance companies.

But many homes bought with subprime loans are in places like California and other high-cost areas where even many modest homes far exceed the conforming loan limits of these agencies, which is about $417,000.

In other words, Freddie Mac would not be permitted to buy a restructured mortgage for the average home in San Francisco, where the median house price is more than $718,000, according to the National Association of Realtors, or in San Jose ($740,000), Los Angeles ($568,00) or many other metropolitan areas.”

http://money.cnn.com/2007/04/18/real_estate/barriers_to_solving_subprime_problems/index.htm

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Fannie and Freddie are GSEs so losses will eventually be get picked-up by the taxpayers. In one form or another, we’ll pay for their mistakes in the form of subsidies and/or government guarantees.

Who said said that handouts were only for the poor?

[Cow_tipping]

FM, FM and FM (Ha ha Farmer Mac) have implicit bail out clauses. Yee haw …
Of course CA and NYC and boston and NJ and other bubblicious places dont have any FM, FM or FM unless its in the 80’s.
Cool.
Cow_tipping.

[Author]

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