bostonbubble.com Forum Index bostonbubble.com
Boston Bubble - Boston Real Estate Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

 
Go to: Boston real estate bubble fact list with references
More Boston Bubble News...
DISCLAIMER: The information provided on this website and in the associated forums comes with ABSOLUTELY NO WARRANTY, expressed or implied. You assume all risk for your own use of the information provided as the accuracy of the information is in no way guaranteed. As always, cross check information that you would deem useful against multiple, reliable, independent resources. The opinions expressed belong to the individual authors and not necessarily to other parties.

Fed split over rate impact of mortgage purchases

 
Post new topic   Reply to topic    bostonbubble.com Forum Index -> News & Reference Suggestions
View previous topic :: View next topic  
Author Message
news



Joined: 14 Jul 2007
Posts: 0
Location: Greater Boston

PostPosted: Tue Jan 12, 2010 2:23 pm GMT    Post subject: Fed split over rate impact of mortgage purchases Reply with quote

Use this forum thread to discuss the following link.

Description: Fed split over rate impact of mortgage purchases
URL: http://www.ft.com/cms/s/0/684e894c-ff1b-11de-a677-00144feab49a.html
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=2776

Subscribe to New Links: RSS Feed
Suggest a Link: New Topic
Back to top
View user's profile Send private message Visit poster's website
balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Tue Jan 12, 2010 5:56 pm GMT    Post subject: The answer to CL's question Reply with quote

Will the Fed act simply to ensure that housing prices don't decline? It doesn't seem so:

Quote:
Mainstream Fed officials are likely to apply a tougher three-part test. How large is the rise in mortgage rates? How vulnerable is the housing market to this? Is the rest of the economy strong enough to tolerate some further weakness in housing or not?
Back to top
View user's profile Send private message Send e-mail
CL
Guest





PostPosted: Wed Jan 13, 2010 1:02 pm GMT    Post subject: Reply with quote

I have a feeling the focus of government help will shift from Fed purchasing MBS securities directly to Fannie and Freddie/FHA and HARP. Fed is not designed to be a housing policy machine and what they did is to save the market from complete collapse, but not really ideal solution.

So instead of supporting the mortgage market by being the biggest securities buyer (mainly to provide liquidity to MBS market), support the market more directly via Fannie and Freddie to give equity directly to targeted homeowners. The 12/24 cap removal is one step towards that. I expect HARP to be expanded. A lot of mortgages will be asked/forced to be mortified, reducing foreclosure and give some home equity to those bought-at-the-peak homeowners. Fan and Fred will make huge losses along the way in order to finance it but it seems they have no issue doing so (have been in loss making mode for a while now). Since 12/24, Treasury can now unlimitedly support Fan and Fred, without Congress approval. So in short, money will transfer from taxpayer (I am one of them) to Treasury to Fan/Fred/FHA to underwater homeowner (I am not one of them, if you wonder). If you want to see how much government is helping the market, just look at how much losses Fan/Fred is making.
Back to top
Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Wed Jan 13, 2010 5:06 pm GMT    Post subject: Reply with quote

Is there an upper limit to the amount that Fannie/Freddie/FHA can lose? If so, what defines that limit? I'm thinking that the only limit is the inflationary pressures generated by printing the dollars to do it.
Back to top
View user's profile Send private message
CL
Guest





PostPosted: Wed Jan 13, 2010 5:34 pm GMT    Post subject: Reply with quote

There is no limit on how much Freddie and Fannie can lose. It used to be 100 mil from Hank Paulson days when Fred&Fan went to conservatorship, then increased to 200mil, then 400mil, then unlimited.
Back to top
Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Thu Jan 14, 2010 2:07 pm GMT    Post subject: Reply with quote

Estimated GSE Losses = $448 Billion

http://www.ritholtz.com/blog/2010/01/gse-losses-448-billion/
Back to top
View user's profile Send private message
CL
Guest





PostPosted: Thu Jan 14, 2010 4:11 pm GMT    Post subject: Reply with quote

I briefly looked at it and it really depends on whether how the housing market goes. But the underlying idea is the same - Fannie and Fred is now a policy machine and will have huge losses going forward (part of it deliberately via HARP).
Back to top
Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Thu Jan 14, 2010 8:11 pm GMT    Post subject: Reply with quote

Yeah, it's just an estimate based on the performance of loans so far. It just demonstrates that we're talking about some really big losses.

That number doesn't even include potential losses at the FHA...
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic    bostonbubble.com Forum Index -> News & Reference Suggestions All times are GMT
Page 1 of 1

 
Jump to:  
You can post new topics in this forum
You can reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Forum posts are owned by the original posters.
Forum boards are Copyright 2005 - present, bostonbubble.com.
Privacy policy in effect.
Powered by phpBB © 2001, 2005 phpBB Group