Home » Finance » Mortgage

Fannie Mae and Freddie Mac are Finding Help

Jul 31, 2008
In an effort to find more and more assistance with the current real estate problems, Freddie Mac and Fannie Mae are in talks with the Treasury, White House officials and the Federal Reserve. In essence, both Freddie Mac and Fannie Mae are looking for ways to give additional financing for the struggling mortgage companies whose financial problems and ammount of homes in foreclosure are one of the bigger issues in the real estate sector.

What is one of the ways that Freddie Mac will help with their money problems? They are scheduled to sell roughly $3 billion in short term notes starting July 14th. In case they cannot find enough investors, they are negotiating for a backup plan.

Henry Paulson, the Treasury Secretary, is likely to make a planned announcement to reinforce his support for Freddie Mac and Fannie Mae as both companies lost roughly 45% of their value in the past week alone. Since both Freddie Mac and Fannie Mae are an integral part of the success of the real estate market, their stability is essential. Both companies guarantee roughly half of the $12 trillion left in outstanding home mortgages in the United States.

In addition to the current sale of $3 billion in short term funds, the talks are looking at additional ways to fund the companies in case the businesses are unable to raise the capital in the future. One option involves company recapitalization, although neither Frannie Mae nor Freddie Mac want this much government involvement. The Treasurys main focus is to support Freddie Mac and Fannie Mae throughout their current financial state.

Currently, real estate experts estimate that Fannie Mae and Freddie Mac would have about $77 billion in losses before the government could step in for assistance. However, the plans and talks now are an effort to stem losses before they get any worse in the housing market. The auction scheduled by Freddie Mac will have both three month and six month reference bills in an effort to raise monies.

The money will be used in mortgagee securities in future transactions. Unfortunately, the issuances do not have any asset backing, which prompts a great deal of speculation in the marketplace as to the potential for future loss and financial catastrophe. To compare, the mortgage backed securities are less likely to collapse since they are backed by home loans and additional assets.

There are additional hopes for financial investing in the future for both Freddie Mac and Fannie Mae. They have a number of different venues for capital and liquidity that they could access to stabilize the current financial status of these companies. In addition, they could gain access to a discount window offered by the Federal Reserve.

The Federal Reserve would be able to jump in to assist in stemming the losses from these businesses and therefore help to stabilize a failing real estate marketand house values. However, the Federal Reserve spokesperson declares that the Federal Treasury has not yet had any talks about accessing funds for a direct loan from the central bank.
About the Author
Rating:
Please Rate:
(Average: Not rated)
Views: 126
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources