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The Fannie and Freddie Stakes Are High

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Re: The Fannie and Freddie Stakes Are High

#21

Post by jaxtracks »

mrinterweb wrote: post #19
onlyrealcuzzo wrote: post #14

Earlier quoted context omitted.

The government insures against home price decreases. It has zero interest in homes going down in value (not only from a voting perspective, but also from a financial perspective). The thing that's going to give (long term) is not going to be nominal home prices. Real home prices declines are plausible.

Anyone who's invested in real estate doesn't want home prices to go down, but it seems a necessity considering how affordability has been decreasing. I would think a buyer market can only sustain so much. If a recession is caused by tariffs, AI taking jobs, war, etc; the real estate market seems to be in a precarious enough position to be affected.

Well, inflation can always solve affordability if prices stagnate. This is what made the 90s a great time to buy, right? We're pretty far behind the ball though, I think it'd be like 20 years for us to get back to that level of affordability at current nominal interest rates.

Re: The Fannie and Freddie Stakes Are High

#22

Post by dsr_ »

floren wrote: post #5
onlyrealcuzzo wrote: post #4

> One possibility here is for the government to cancel its entire $348.4 billion senior preferred claim for the benefit of existing common and preferred shareholders. That is obviously what those shareholders want It seems the only reason the government should give up ~$28B in revenue PER YEAR for literally nothing is to put the government in more debt and give free money to Bill Ackman.

Yeah it would be pretty fucked up if the current administration pushed something that's bad for the US government but very good for some billionaires. I assume the only reason it hasn't happened yet is that Trump is still figuring out how to tank Fannie/Freddie shares beforehand so he and his cronies can buy them up like they did with the on-again off-again tariff threats.

The obvious play is for a staffer to invite Bill Ackman to play golf at a Trump course and explain that a big investment in whatever bribery scheme Trump has going now would make it easier to sell Fannie and Freddie.

Re: The Fannie and Freddie Stakes Are High

#23

Post by ethagknight »

Isnt the obvious answer for the Fed to start dropping interest rates somewhere in between the 0 and current level? eases a lot of pressure on the underlying assets and allows for markets to start moving again. Even if it's a short reprieve from current rates, a window to repackage and move assets would buy everyone time and start to bleed off some underperforming notes (or maybe just the marginal ones, still reducing drag).

Or maybe this is a different issue that im not quite grasping.

Re: The Fannie and Freddie Stakes Are High

#24

Post by onlyrealcuzzo »

mrinterweb wrote: post #19
onlyrealcuzzo wrote: post #14

Earlier quoted context omitted.

The government insures against home price decreases. It has zero interest in homes going down in value (not only from a voting perspective, but also from a financial perspective). The thing that's going to give (long term) is not going to be nominal home prices. Real home prices declines are plausible.

Anyone who's invested in real estate doesn't want home prices to go down, but it seems a necessity considering how affordability has been decreasing. I would think a buyer market can only sustain so much. If a recession is caused by tariffs, AI taking jobs, war, etc; the real estate market seems to be in a precarious enough position to be affected.

> the real estate market seems to be in a precarious enough position to be affected.

In real terms, yes.

In nominal terms, no.

The dollar will get tanked, so that asset prices fall much less than they otherwise would.

Re: The Fannie and Freddie Stakes Are High

#25

Post by sidewndr46 »

ethagknight wrote: post #23

Isnt the obvious answer for the Fed to start dropping interest rates somewhere in between the 0 and current level? eases a lot of pressure on the underlying assets and allows for markets to start moving again. Even if it's a short reprieve from current rates, a window to repackage and move assets would buy everyone time and start to bleed off some underperforming notes (or maybe just the marginal ones, still reducing…

This seems to be the quintessential comment along the lines of how we can kick a time bomb down the road a bit.

Re: The Fannie and Freddie Stakes Are High

#26

Post by onlyrealcuzzo »

williamcotton wrote: post #20
jgalt212 wrote: post #17

Earlier quoted context omitted.

Loosening up zoning laws to allow for much greater supply of housing. Blue states don't do this because it would be bad for the investor class who's owns real estate.

In states where there are looser zoning laws and more housing is built, who invests in and profits more from the new construction, the investor class or the poor?

Who un-benefits more from there not being enough housing? The rich or the homeless?

Re: The Fannie and Freddie Stakes Are High

#27

Post by y-curious »

sidewndr46 wrote: post #25
ethagknight wrote: post #23

Isnt the obvious answer for the Fed to start dropping interest rates somewhere in between the 0 and current level? eases a lot of pressure on the underlying assets and allows for markets to start moving again. Even if it's a short reprieve from current rates, a window to repackage and move assets would buy everyone time and start to bleed off some underperforming notes (or maybe just the marginal ones, still reducing…

This seems to be the quintessential comment along the lines of how we can kick a time bomb down the road a bit.

>kick a time bomb down the road

Add it to the list that includes social security funding, population decline, poor infrastructure, attitudes towards vaccines and the national debt. It's just how we roll

Re: The Fannie and Freddie Stakes Are High

#29

Post by amanaplanacanal »

jgalt212 wrote: post #17
roxolotl wrote: post #16

Earlier quoted context omitted.

What would helping the poor without helping investors at all look like to you?

Loosening up zoning laws to allow for much greater supply of housing. Blue states don't do this because it would be bad for the investor class who's owns real estate.

Some blue states have done this, including California, Oregon, Connecticut, and Maine. I expect more will follow.

Re: The Fannie and Freddie Stakes Are High

#30

Post by TuringNYC »

bko wrote: post #11
onlyrealcuzzo wrote: post #4

> One possibility here is for the government to cancel its entire $348.4 billion senior preferred claim for the benefit of existing common and preferred shareholders. That is obviously what those shareholders want It seems the only reason the government should give up ~$28B in revenue PER YEAR for literally nothing is to put the government in more debt and give free money to Bill Ackman.

I don't think its a good idea but I think it's in the long run interest of the government/taxpayer to divest out of Fannie/Freddie. The current situation makes that impossible, so they'll have to take some kind of haircut. As the article discusses, one of the options is to screw over current investments (Ackman) and raise an IPO, although it would be impossible to raise enough to buy the government out at its current…

They can divest out of Fannie/Freddie but we'll still have the liability, just as a shadow liability. Fannie/Freddie are Too Big to Fail, so the next time things get bad, we'lljust need to step back in.
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