Already on ArticleSlash?

Forgot your password? Sign Up

Fannie Mae and Freddie Macs Current Financial Crisis

 


Visitors: 390

Mortgage giants Fannie Mae and Freddie Mac are presently undergoing a tough time. With confidence level and shares going down significantly for the past week, some people think that a government bailout is about to happen.

Fannie had a 28 percent drop in shares, while Freddie slid 26 percent. The loss in value now totals to 80 percent since the start of the year.

It's alarming how two financial institutions holding half of the country's mortgages are starting to crumble in the midst of the housing crisis. Failure in both government-sponsored enterprises (GSEs) could have a devastating effect not only here in the United Stated but in other countries as well.

Foreign governments own money used in both companies’ operations. Investors, companies, mutual and pension funds abroad also have money utilized by Fannie and Freddie.

To prevent further damage, the government came up with measures to help Fannie and Freddie get billions of dollars in the form of a “rescue package". The rescue package aims to buy the company stocks using public money. Aside from that, the Federal Reserve will allow both companies to borrow money at a special rate, and would make one of its short-term lending programs available. Aside from that, the administration is seeking the Federal Reserve's permission to let Fannie and Freddie secure liquidity.

The Federal Reserve is closely working with the Congress and Treasury to try and put these rescue measures into effect. The Treasury is also seeking to stretch the credit line for both institutions to $300 billion, and buy equity directly from both GSEs to prevent liquidity problems in the future.

The rescue plan was put into effect after close monitoring of both Fannie and Freddie. The government immediately sought precautionary steps to ensure that both mortgage giants have enough money to stay afloat.

MortagesForEveryone.com is a site that aims to provide information about mortgage-related concerns like refinancing your home, interest rates, using your home equity, down payments, home improvement loans, and many others.

(344)

Article Source:


 
Rate this Article: 
 
Will Fannie Mae Or Freddie Mac Modify Your Mortgage to Avoid Foreclosure?
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

What is the Current Financial Crisis About?

by: Ernest Ionescu (October 01, 2008) 
(News/Economics)

Fannie Mae and Freddie Mac Takeover - What Does it Mean?

by: Ki Gray (September 06, 2008) 
(News/Pure Opinion)

Federal Rescue For Fannie Mae and Freddie Mac

by: Zeus John Martinez (September 25, 2008) 
(Finance/Mortgage Refinance)

The Fallout From the Fannie Mae, Freddie Mac Takeover

by: Ki Gray (September 11, 2008) 
(News/Economics)

Is the Current Financial Crisis a Blessing For the Environment?

by: Axel Meierhoefer (October 05, 2008) 
(News/Economics)

The Current Financial Crisis and How Annuities Are Affected

by: Bill Broich (October 15, 2008) 
(Insurance/Life Annuities)

What Does a Government Take Over of Fannie & Freddie Mean For the Average ..

by: Christopher G Burns (September 08, 2008) 
(Finance)

Understanding Fannie Mae, Freddie Mac, and the Housing Market

by: Karlyn Katigbak (August 10, 2008) 
(Finance/Mortgage Refinance)

Give Your Self a Raise and Help Stop the Current Financial Crisis

by: Eric Sullivan (September 28, 2008) 
(News/Economics)

Will Fannie Mae Or Freddie Mac Modify Your Mortgage to Avoid Foreclosure?

by: Nick Adama (December 10, 2008) 
(Real Estate/Foreclosures)