George Formby - Fanlight Fanny
I think the volatility to the mortgage market will start to subside.
"WASHINGTON (MarketWatch) -- The implicit government guarantee of Fannie Mae and Freddie Mac is now explicit. In a dramatic statement released Sunday, the White House and Federal Reserve moved to give the mortgage giants the capital they need to survive the depression in the housing market and turmoil in financial markets that had left them dangling over a cliff. Of most immediate importance, the Fed's board of governors voted to open up its emergency discount window to Fannie and Freddie. In addition, Treasury Secretary Henry Paulson announced that he will seek congressional authorization to buy stock in the two companies and increase the government's credit line."
The bottom line is that the U.S. Government is not going to stand by and watch Fannie Mae and Freddy Mac go bust. While this will not make the bad mortgages go away, there will be plenty of liquidity provided to support these entities while they go through the loan workout process and deal with all this.
To put things in a bit of a perspective, the number was quoted the other day that 1 in every 501 mortgages is in default these days. That is a default rate of 0.2%, or two tenths of one percent.
Davie Allan & the Arrows
C'mon Do the Freddie
I anticipate some more volatility, but I also believe that we are nearing the end of this downturn unless oil skyrockets some more.
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