Monday, August 18, 2008

Fannie and Freddie Get Hammered

Lenders continue to tighten and no one really knows how long that trend will last. Just today, Fannie Mae and Freddie Mac are getting punished on Wall Street since Treasury secretary Hank Paulson said that the government would not serve as a backstop for the GSEs. However, an article in Barron's over the weekend suggested that the Treasury may have no other choice.

A government bailout would likely wash away shareholder equity in the companies. And the future doesn't look promising. I recently spoke with a large REO listing agent who said that Fannie Mae expects an increase in foreclosures in 2009.

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