From Realtor Magazine Online, Daily Real Estate News March 2, 2009
What’s to become of Fannie Mae and Freddie Mac, which are bleeding red ink as home owner defaults continue to increase?
The rising losses will force the government to decide whether to keep putting money into the firms to keep them operating or divide them into smaller businesses and remove government support.
Daniel Mudd, a former Marine, was Fannie Mae’s CEO before the government fired him and put James Lockhart, director of the Federal Housing Finance Agency, in charge. He likened the situation to the U.S. invasion of Iran. "The troops got to Falluja in a couple of weeks and seized the radio towers, but there was no plan to run the country once the shooting stopped," he said.
Under the Obama plan, Fannie and Freddie are expected to refinance as many as 5 million underwater mortgages.
Fannie's government-appointed CEO, Herbert Allison, said: "It's not about maximizing returns on equity or profits. It's really about being of use to the country during this very difficult period."
Source: The Wall Street Journal, James R. Hagerty and Damian Paletta (02/27/2009)
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