Fannie Mae And Freddie Mac Facing Possible Takeover By U.S.
SOURCE: The New York Times
The mortgage foreclosure crisis has hit both Fannie Mae and Freddie Mac extremely hard. The companies are by far the biggest providers of financing for domestic home loans. If they are unable to borrow, they will not be able to buy mortgages from commercial lenders. In turn, that would make it more expensive and difficult, if not impossible, for home buyers to obtain credit, freezing the United States housing (and commercial lending) market.
Both Fannie and Freddie shares have been dropping due worries by shareholders. This has caused their cost of borrowing to rise. In a statement issued by Fannie Mae they stated "Our company has raised more than $14 billion in capital since November 2007, including $7.4 billion most recently in May," the company said. "As our regulator has stated, and has reiterated in public statements this week, we are adequately capitalized."
The biggest worry is that if Fannie Mae and Freddie Mac are unable to resolve their difficulties, that the economy will be affected not just within the U.S. but worldwide. The securities of both Fannie and Freddie are held by many financial institutions, central banks, and investors overseas.
Read full report »
The mortgage foreclosure crisis has hit both Fannie Mae and Freddie Mac extremely hard. The companies are by far the biggest providers of financing for domestic home loans. If they are unable to borrow, they will not be able to buy mortgages from commercial lenders. In turn, that would make it more expensive and difficult, if not impossible, for home buyers to obtain credit, freezing the United States housing (and commercial lending) market.
Both Fannie and Freddie shares have been dropping due worries by shareholders. This has caused their cost of borrowing to rise. In a statement issued by Fannie Mae they stated "Our company has raised more than $14 billion in capital since November 2007, including $7.4 billion most recently in May," the company said. "As our regulator has stated, and has reiterated in public statements this week, we are adequately capitalized."
The biggest worry is that if Fannie Mae and Freddie Mac are unable to resolve their difficulties, that the economy will be affected not just within the U.S. but worldwide. The securities of both Fannie and Freddie are held by many financial institutions, central banks, and investors overseas.
Read full report »
