Hello all: I was thinking today about Fannie Mae and Freddy Mac and their recent announcements of billions in loan losses. Today I checked their stock and it was trading at $5.19 and $3.29 respectively. These are off highs of well over $40 each. Alot of pundits are wondering if these two essentially government entities will survive and, if so, in what form.
I imagine the government will have to swoop in and bail these two out. That's not a bad move although I wonder if they would have survived on their own. We're obviously in the midst of an unprecedented crisis yet I believe the carnage is almost over. Starting with Countrywide's troubles last summer and culminating in bank failures and probably consolidations, I believe our market is correcting and policing itself.
I still think that it will be until next year before the mortgage ship rights itself. But I'm encouraged when I hear home sales were up almost 4% in July. Sure, people are buying due to others misfortune (foreclosures, etc.) but the market seems to be rebounding. I'm curious what you think. What are you seeing in your marketplace? Up here, we were hit last and possibly the softest compared to other parts of the country. We'll be feeling some pain into next year for sure. That's it for now. Have a great night!
Paul
Paul McFadden
I don't think they could have survived on their own but I'm not sure if more government involvement is the answer. If they would have been allowed to fail granted it would have been a mess for awhile but eventually I think the natural market would have done better than any government influenced company. It feels to me like by saving these large compaies Fannie, Freddie, Bear Sterns, we are postponing a natural correction. With each delay the real problem only gets worse and the correctin will only take longer in my opinion.
Paul,
If they aren't bailed out there will have to be some government entity created to take their place. They were after all created to insure loans to wall street could trade mortgage bonds with some form of certainty.
I really think they were run poorly and should be required to restructure to insulate from this happening again.
Thanks, Brian. Those are some good thoughts. Have a great day today!
Justin: Thank you! I like your free market stance. Take care.
Paul
Paul, I think it is good to see the good in everything. There will be slight ups and downs and fortunately folks have not completely abandoned the idea of buying, given all the bad news out there. The reports however are not so good. But I will save that for another post. In the emantime, let's celebrate the good and keep doing what we do best
Thanks
Bo
Thanks, Bo. I appreciate your sentiments. We'll see which way the world turns. Have an awesome day!
Paul
Paul, we didn't see much of an increase in July, but my sense is that locally numbers will be up for August. The phones are ringing and that's always a good sign ;-)
Thanks Colleen. I appreciate it. Go get 'em girl!
Paul