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Fannie Mae, Freddie Mac to Back Home Loans of Nearly $1M as Prices Soar

wsj.com

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Re: Fannie Mae, Freddie Mac to Back Home Loans of Nearly $1M as Prices Soar

#71

Post by yardie »

JKCalhoun wrote: post #8
yardie wrote: post #4

$1M is a $4000/m mortgage requiring a $12000/m income or $140k salary. That seems doable for some professions. If you are on the fence of buying a home, right now would be a good time to do it. Because they aren't getting cheaper and with this announcement they will almost certainly rise to meet this new, looser qualification.

Analysts I've been coming across lately are predicting a single digit softening of the housing market in 2022. FWIW.

Valuations in my neighborhood have gone up 15%-20% yoy. In my parents neighborhood (older homes on larger parcels) it's almost 30% yoy.

Re: Fannie Mae, Freddie Mac to Back Home Loans of Nearly $1M as Prices Soar

#72

Post by chernevik »

rich_sasha wrote: post #68
chernevik wrote: post #55

"Under the terms of their 2008 conservatorships, [Fannie and Freddie] currently have access to more than $250 billion in support from the Treasury Department." These institutions and their Federal guarantees contributed enormously to the 2008 housing bubble and subsequent collapse. But 13 years later, here they are, allocating credit. What could go wrong?

IIRC, these two did exactly what they are supposed to. They always had implied backing of the government, meaning basically this. The issue was actually mortgages not backed by either of these, which however were still securitised and traded as if they were. When housing market slowed, evictions and defaults mounted, investors in FDIC et al were fine, the mortgages were backed. It was all the other ones that went to…

Investors in their securities didn't ask whether the supporting collateral was inflated because they didn't have to. And because the GSEs made up the bulk of the market, it was their willingness to lend that drove that market. Their expansion of excess credit (along with the Fed's constant easing) lead to the bubble in housing prices that drove the whole thing.
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