How the Fannie/Freddie Fallout could affect you

[Sara R]

Saw this on the New York Times website--

 

How Fallout could affect Main Street

 

Fannie and Freddie are the people who buy the loans from the banks, especially lately. Sounds like this will make it even harder to get a mortgage, which means it would be much harder to sell houses.

 

If Paulson (Treasury secretary) bails out Fannie and Freddie and takes their losses on the Fed Govt's balance sheet, that about doubles our national debt, which means the dollar would be toast.

 

If Paulson doesn't bail them out, that means a lot of foreign investors have lost a ton of money, and it's bad for the "full faith and credit of the US government" because these are federally chartered institutions--

 

Paulson said just last week that there was nothing to worry about, no bailout necessary--so of course we and the rest of the world should trust him next time he speaks [/sarcasm] If they are trying to promote trust, I don't see how they can do it when they change their story every week.

[Amy in Orlando]

I tried to read about this today and ended up playing ostrich. Lately, the news is just too much to think about for me. We're feeling the effects of rising oil prices through our inefficient cars and groceries. And it's starting to hurt. And, I know some people here think this is a good thing. But, we have always been cognizant of our driving, shopping, errand-running. Come to central Florida and you can see how futile public transportation is. The house is a whole 'nother can of worms. We weren't and aren't planning to move in the near future so I"m playing dumb on that whole side of things. Smart? No. But, it's what I can manage for now without my head exploding. (Short of sending out fundraising letter to our friends, acquaintances and families ;) ...)

[TraceyS/FL]

Come to central Florida and you can see how futile public transportation is.

 

Now Amy it's there...... if you are going from the airport -> Disney and back!

 

What i wouldn't give for commuter rail to happen - and happen up this way so i could take the train into town for the doctor, instead of spending $25 in gas (and no, we have no pediatric endocrinologists up here).

 

I'm going to try to convince DH he HAS to go to Costco when we drops me off at the airport on thursday.... (gee, well, i guess they could starve till i got home on Monday huh?). All about using that $25 for more than one purpose.

 

I had a dream last night that my $40 i put in my tank kept increasing - and in an hour or so i had a FULL TANK :lol:

[Marie in Oh]

(Short of sending out fundraising letter to our friends, acquaintances and families ;) ...)

 

Maybe we should send out letters to aquaintences to help with food. Ya know, the economy is down and we have a lot of mouths to feed. A little help is always a good thing. ;)

 

As far as the Freddie, Fannie thing, it is another symptom of a sick economy. It is a bit scary. I am glad I am not buying/selling a house.

 

I saw on the local news that bank stocks-- they were talking locally about Fifth-Third and National City specifically, tanked yesterday. NC tanked 29 % and stopped trading mid day. Then they showed people in CA standing in line at IndyMac bank pulling all their money and closing their accounts. It was eerie.

 

I think it is going to get worse before it gets better, if at all.

 

And Bush lifting the off-shore ban on oil drilling is just a band-aid I am afriad (and I am a Bush supporter-- I just don't agree with the party on this particular issue). I know there are lots of people who say that we might as well use the resources we have-- I agree to some degree, but I will be surprised if it is any affect on oil prices. And it is oil dependance that is the issue. I do not believe there is a supply problem.

 

We continue to wonder and speculate and our confidence in the US government's ability to guide us through these issues is waning, no matter what party gets the office in 4 months.

 

The third crunch is coming. First it was housing and mortgages, next oil, and now I think we will see consumer credit crashng around people.

 

Why? Because even with all that is going on, you still see people, droves of people, at shopping malls, car lots, retail outlets, etc, spending, spending, spending. We live in a country where money is nebulous, debt is normal, and people want what the they want, and they want it NOW whether they have the $$$ or not. It will take a huge philosophical change to save this economy IMHO.

 

So there you go. I have no real opinion on the whole economy thing. Can't you tell? ;) :lol:

[Guest Virginia Dawn]

Can I play ostrich too? Yesterday, on the radio, I heard about people beginning to panic and withdraw all their money from a particular bank. The story was done in a "matter of fact" tone, but my brain was saying, "Oh no, that amounts to a run on a bank! This can't be happening."

[Tracey in TX]

Saw this on the New York Times website--

 

How Fallout could affect Main Street

 

Fannie and Freddie are the people who buy the loans from the banks, especially lately. Sounds like this will make it even harder to get a mortgage, which means it would be much harder to sell houses.

 

If Paulson (Treasury secretary) bails out Fannie and Freddie and takes their losses on the Fed Govt's balance sheet, that about doubles our national debt, which means the dollar would be toast.

 

If Paulson doesn't bail them out, that means a lot of foreign investors have lost a ton of money, and it's bad for the "full faith and credit of the US government" because these are federally chartered institutions--

 

Paulson said just last week that there was nothing to worry about, no bailout necessary--so of course we and the rest of the world should trust him next time he speaks [/sarcasm] If they are trying to promote trust, I don't see how they can do it when they change their story every week.

I'll play hard ball. Getting a loan should NOT be easy. The individual signing the loan should have signed in good faith and have collateral in case of defaulting on the loan. That's why our parents were required to put down 20% of their own money toward a home. If they lost the home, they also lost money. Negative amortization loans (interest only) are just one example of how the concept of 'everyone deserves the American dream' is false. Everyone deserves the opportunity to work toward, save, and buy their dream home. Not be given in the feeble hopes that they pay up.

Should Freddie Mac and Fannie May be saved the Big Brother (oops, the government)? What good could possibly come from this? We're already in debt up to our Constitutional eyebrows? Why should every citizen and our children's generation pay for our generation's stupidity and greed? It stinks that foreign investors will lose money. Welcome to the stock market. We've lost a lot of money this year, too. That's gambling with an anticipated respectable return.

I wish we'd stop covering for people's massive, greedy errors and sometimes let people fail. Sometimes let industries fail in order to LEARN from our/their mistakes. Make sure it never happens again. Our economy is messed up whether we clean up Freddie and Fannie or let is flail.

[Marie in Oh]

[QUOTE=Tracey in TX;380515]I'll play hard ball. Getting a loan should NOT be easy. The individual signing the loan should have signed in good faith and have collateral in case of defaulting on the loan. That's why our parents were required to put down 20% of their own money toward a home. If they lost the home, they also lost money. Negative amortization loans (interest only) are just one example of how the concept of 'everyone deserves the American dream' is false. Everyone deserves the opportunity to work toward, save, and buy their dream home. Not be given in the feeble hopes that they pay up.

Should Freddie Mac and Fannie May be saved the Big Brother (oops, the government)? What good could possibly come from this? We're already in debt up to our Constitutional eyebrows? Why should every citizen and our children's generation pay for our generation's stupidity and greed? It stinks that foreign investors will lose money. Welcome to the stock market. We've lost a lot of money this year, too. That's gambling with an anticipated respectable return.

I wish we'd stop covering for people's massive, greedy errors and sometimes let people fail. Sometimes let industries fail in order to LEARN from our/their mistakes. Make sure it never happens again. Our economy is messed up whether we clean up Freddie and Fannie or let is flail.

 

:iagree::iagree::iagree:

[Kelli in TN]

First of all, I agree with Tracey in TX. It is too easy. I was fortunate in that I had a small inheritance that we used as our first down payment. Our second downpayment came from the equity from selling our first home. Our third down payment came from the equity from selling our second home. I am guessing we will be in our third home from here on out! Mortgages have been too easy to get, and people do not want to stay in houses long enough to build up equity. Or if they do have equity they get a second mortgage. We have only moved when an increase in children has made the house too small. I know many people who move every 3 years or so just because.

 

All credit is too easy. For goodness sakes I have two credit cards in my name only and I have not had a job in 17 years. And everytime I turn around they increase my spending limit. I want to call them and say "You know I have no job, right?"

[Soph the vet]

First of all, I agree with Tracey in TX. It is too easy. I was fortunate in that I had a small inheritance that we used as our first down payment. Our second downpayment came from the equity from selling our first home. Our third down payment came from the equity from selling our second home. I am guessing we will be in our third home from here on out! Mortgages have been too easy to get, and people do not want to stay in houses long enough to build up equity. Or if they do have equity they get a second mortgage. We have only moved when an increase in children has made the house too small. I know many people who move every 3 years or so just because.

 

All credit is too easy. For goodness sakes I have two credit cards in my name only and I have not had a job in 17 years. And everytime I turn around they increase my spending limit. I want to call them and say "You know I have no job, right?"

:iagree: with Kelli and Tracey. I also had a small inheritance which really helped dh and I pull together 20% for our first house so we could avoid mortgage insurance. It should be difficult to buy a house. It shows that if you have the persistence, fortitude, and work ethic to save for a home that you are more than likely going to be responsible in making your payments and taking care of the maintenance of the home. When things come too easily, they are easily taken for granted. I am guessing that the pioneers who had to clear their land and build their own homes without modern technology really appreciated those homes too.

[TraceyS/FL]

I agree.

 

Having lived in CA at the start of this - it scared me then. DH and I talked often about all the foreclosures that would be happening. The insanity of the house prices led to the crappy loans, the ease of getting the crappy loans led to the insane increase in house prices.

 

I thank god everyday we got out of CA when we did. We have no mortgage here - and I hope the people that bought our house in CA, allowing us to buy this one, will get to KEEP the house.

 

It's scary..... i've seen it coming for 4+ years and it doesn't get any easier to stomach.

[Tracey in TX]

I agree.

 

Having lived in CA at the start of this - it scared me then. DH and I talked often about all the foreclosures that would be happening. The insanity of the house prices led to the crappy loans, the ease of getting the crappy loans led to the insane increase in house prices.

 

I thank god everyday we got out of CA when we did. We have no mortgage here - and I hope the people that bought our house in CA, allowing us to buy this one, will get to KEEP the house.

 

It's scary..... i've seen it coming for 4+ years and it doesn't get any easier to stomach.

No mortgage? Way to go!!! That is a major accomplishment!

[TraceyS/FL]

No mortgage? Way to go!!! That is a major accomplishment!

 

Only thanks to the insane property value increases in CA. Our homeowners & prop taxes tax the budget enough monthly right now. We don't live in a high income area (DH is a mechanic by trade, although he's not doing that full time right now).

 

But it was the plan when we moved - not to have a payment, and it worked and is worth the sacrifices we make in other areas.

[starlashine]

 

All credit is too easy. For goodness sakes I have two credit cards in my name only and I have not had a job in 17 years. And everytime I turn around they increase my spending limit. I want to call them and say "You know I have no job, right?"

 

 

:iagree::lol::lol::lol:

[Sara R]

And now today Paulson says, "Fannie and Freddie don't plan to use this bailout...for now." Sheesh, you couldn't make this stuff up. How do they expect the world to keep faith in the financial system if he can't keep his story straight from one day to the next?!? Liar liar pants on fire--

 

And Shiela Bair, the FDIC chair, held a press conference today to say "Deposits in the nation's banks are safe; the US banking system is sound." Does it make anyone else nervous that she had to stand up and say this? Let's see: they said the same thing about Bear Stearns, and within a week it was bankrupt. They said the same thing about Indymac and Fannie and Freddie last week, and look what happened with them. Now they are saying it about the entire banking system-- Really what are we supposed to think?

[Amy loves Bud]

I'll play hard ball. Getting a loan should NOT be easy. The individual signing the loan should have signed in good faith and have collateral in case of defaulting on the loan. That's why our parents were required to put down 20% of their own money toward a home. If they lost the home, they also lost money. Negative amortization loans (interest only) are just one example of how the concept of 'everyone deserves the American dream' is false. Everyone deserves the opportunity to work toward, save, and buy their dream home. Not be given in the feeble hopes that they pay up.

Should Freddie Mac and Fannie May be saved the Big Brother (oops, the government)? What good could possibly come from this? We're already in debt up to our Constitutional eyebrows? Why should every citizen and our children's generation pay for our generation's stupidity and greed? It stinks that foreign investors will lose money. Welcome to the stock market. We've lost a lot of money this year, too. That's gambling with an anticipated respectable return.

I wish we'd stop covering for people's massive, greedy errors and sometimes let people fail. Sometimes let industries fail in order to LEARN from our/their mistakes. Make sure it never happens again. Our economy is messed up whether we clean up Freddie and Fannie or let is flail.

 

For a girl who carries designer handbags, I sure do agree with you!

[Amy loves Bud]

Only thanks to the insane property value increases in CA. Our homeowners & prop taxes tax the budget enough monthly right now. We don't live in a high income area (DH is a mechanic by trade, although he's not doing that full time right now).

 

But it was the plan when we moved - not to have a payment, and it worked and is worth the sacrifices we make in other areas.

 

We're in the same situation. We had enough of an appreciation on our D.C. home to pay a substantial amount down here, and we just finished paying off our mortgage at the end of the year. But the property taxes and insurance we pay are still more than the principal and interest were. It's crazy.

[elegantlion]

We had a plan to sell our house next year, now I'm biting my nails on that one. If we got "stuck" here it wouldn't be all that bad, but this is not where we want to stay long term. :glare: