Fannie and Freddie are within a week or two of a full government bailout, both stocks are plummeting this week...we are also seeing increases in "fees" coming to all mortgages which will add an average of $750 in additional closing costs to every loan on top of the other rate and fee increases we have already seen.

What really sucks is that interest rates should be a FULL 1% lower than they actually are today which would put us back in record low rate territory but the few lenders that are left have to make up all the billions in losses they have incurred this year...no better way to move all the inventory sitting around than low rates but alas I am about out of the mortgage bus and going to move into real estate full time focusing on distressed property sales/purchases and let some other schmuck deal with the loan Bullshiat...

well they are done, the govt. now controls 5trillion dollars of residential loans and the fate of all future lending as FHA/VA and Fannie Freddie are the only games in town...expect much higher rates next week and then who knows...cheers

Watch the overseas markets and dollar reaction tonight if they drop and the dollar also tanks which I suspect it will we'll likely see a big sell off here since there are so many foreign sovereign wealth funds invested in FNM and FRE. Either way it'll be panic selling or panic covering.....:>)

I think it already started last week. You cant keep anything quiet, regardless of the insider laws.

some new information out there suggests that rates may go DOWN as much as 1% tomorrow on 30 year fixed loans...that would be interesting.

The jumbo market has been horrible for people building large homes and financing over the jumbo amount for their area, and wanting to lock their rates for an extended period. Luckily our's won't be that way as we'll be under $300K when we're done, I hope.

It would be nice to see that market shore up a bit, because there are still quality borrowers out there that are getting the short end.

Yeah like requiring 20% down.

just one more step in the road to me never getting out of the apartment life.

irie -- you'll be getting news from tacoma soon enough, whether you read the daily zero or the tribune...of course, i'll also be out of work...not a whole hell of a lot of work in the printing industry around this area any more.

quick update on the mortgage rate market this AM, it DOES look like we are in for a huge rate drop this week. The mortgage backed bonds have rallied big time this morning and all indicators are on a float rate scenerio...expect 30 fix rates in the mid 5's or lower by end of the week.

Yes, you are screwed if you cannot verify income but this could be the impetus to get a bunch of refi's going along with getting people off the fence on purchases...tough to beat a combo of record low rates and plunging prices...cheers

Good borrowers with a credit score of 700+ should have no issue borrowing with as little as 5% down.

Don't forget the farm (Rural housing) home loan program. I have some homes in Eatonville that I should be able to get people in for with no down payment. With no PMI and the lower down, its a great loan program. A lots of areas that aren't that far out. I would need to get a map , but I believe Orting, a large portion of South hill (puyallup) boardered by 176th to the west and 78th ave to the North, and then the rest of South Pierce County past 200th, and Yelm are all part of it. That's the area I have worked, but I know every county has portions that quailry. There is also a Pierce County and City of Tacoma assistance that will cover a large portion of the down payment and closing costs too. They are all restrictive, with top and bottem income levels, but for first timers they do work.

http://www.fool.com/investing/dividends-...d-freddie-.aspx

The People Responsible for Fannie Mae and Freddie Mac
By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly
September 10, 2008 Comment (6) Recommend (6)
It was a wise man who noted that the only corporate structure more insidious than a government-sponsored monopoly is a government-sponsored and investor-owned monopoly. In the end, as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have now so painfully proved, trying to serve the master of public policy while generating returns for investors will lead to disaster.

Fannie and Freddie collapsed because they were part and parcel of the widespread gross financial misconduct that has taken place in the United States over the past decade. It's easy to miss this fact, but the reality is that too many people were making too much money pumping up the housing market. In 2005, the Office of Federal Housing Enterprise Oversight (OFHEO), the erstwhile regulator of the two, attempted to limit their use of off-balance sheet entities to groom earnings. In the end, it didn't, because, as one reform-minded politician admitted, Congress was afraid of undermining the housing boom.

Some are more culpable than others
As part of the conservatorship, the Department of the Treasury has demanded that Daniel Mudd and Richard Syron, the CEOs of Fannie and Freddie, respectively, step down. Certainly, at the time of a corporate collapse, those in charge have to bear some responsibility. But Mudd and Syron came into their roles when the great pillaging was well in process.

At some point not too long from now, the nation's attention is going to turn from the immediate players to those who benefitted the most, shouted down the skeptics, and/or stood by as Fannie and Freddie deviated from their core business in the name of growth and/or mission. These people are keeping a low profile right now, until the taxpaying public starts paying attention to something else. As taxpayers, we don't particularly enjoy our role in this relationship, and we're hopeful over the longer term that the following folks cease to enjoy theirs.

Franklin Raines
Fannie Mae was always a political beast, but it reached its elbow-swinging heights during the time when former Clinton administration budget director Franklin Raines sat in the CEO chair. Under Raines' leadership, Fannie overstated earnings by a stunning $10.6 billion, all the while paying Raines and his senior management team massive bonuses.

It was under Raines' management that Fannie morphed from being a company in a sleepy business -- issuing debt to buy mortgages from lenders -- into a far more risky and exciting one: buying up mortgages and holding them, thus capturing the spread between its borrowing costs (which were lower than anyone's other than the federal government's) and the interest rate received. It was a great business, except that it had nothing to do with Fannie's charter. According to a May 2006 report from OFHEO, Raines became obsessed with keeping earnings per share as high as possible and motivated management to achieve that goal by setting up a bonus system that rewarded increasing earnings per share (EPS).

The thing is: Any company can hit an EPS number if it doesn't worry about little things like accounting rules, debt levels, and risk factors. All told, Raines pulled in some $90 million between 1998 and 2003, the majority from bonuses. And when OFHEO began to ask uncomfortable questions, Raines actively lobbied Congress to cut its funding. In April, Raines agreed to disburse $24 million for his role in the accounting "errors."

Timothy Howard
Former Fannie Mae CFO Timothy Howard is another major player who is probably cowering in a corner somewhere. For all of the expletives and derogatory names thrown at former Enron CFO Andrew Fastow, he at least stayed around to take his punishment. Inmate No. 14343-179 pleaded guilty to fraud and is serving a six-year prison term. Howard, on the other hand, saw the writing on the wall -- largely because he was the author -- and got out of Dodge.

As Fannie's CFO from 1990 to 2005, Howard signed off on the financials that overstated the company's earnings by $10.6 billion from 1998 to 2004. His reward? A cool $14 million in salary and $16.8 million in bonuses during the period -- bonuses based on the earnings plan that Raines set up.

While Howard was not the only person at Fannie guilty of constructing fraudulent financial statements quarter after quarter, as CFO he is most responsible for the integrity of said statements. Whether he left early enough to avoid culpability remains to be seen. However, we've heard through the low-security-prison grapevine that Fastow is lonely these days and wouldn't mind talking shop with a fellow former CFO.

Barney Frank
The House Financial Services Committee chairman and Democratic congressman from Massachusetts has long been a proponent of both Fannie and Freddie, assuring the public that their mission to encourage home ownership outweighed the distortive risks they brought to the market, and that the federal government was not, in fact, on the hook for their liabilities. In fact, it seems clear now that Frank had no idea of just how poor a grasp Fannie and Freddie had on their lines of business. As recently as Aug. 25 he told Money magazine, "Fannie and Freddie are better off than the market thinks. ... Part of the problem is rumormongering by short-sellers."

What's more, though Frank will blame past political opponents for failing to further regulate the mortgage market by banning products such as subprime loans, the fact of the matter is that the very presence of Fannie and Freddie incentivized brokers to overstate the creditworthiness of borrowers and then pass on that risk to the federal government, all while being cheered for helping more people "realize the American Dream." While we can all agree (I hope) that mortgage markets only function when -- as Frank told Money, banks "do not lend money to people who can't pay it back" -- Frank's ideology in this case blinded him for decades to the realities of the marketplace and the operations at these companies, leading him to stonewall realistic reform efforts that might have helped us avoid the current calamity.

Angelo Mozilo
There's good reason for Angelo Mozilo to hide under a desk these days. Few, if any, extracted more personal profit from the credit bubble than the CEO and founder of Countrywide Financial. Mozilo's talking points always borrowed heavily from the propaganda of our government-sponsored enterprises (GSEs). Countrywide liked to pretend that it was performing some kind of public service -- "breaking down barriers" -- by making homes more "affordable" to the average (or subaverage) wage earner. Unfortunately, as speculation drove home prices to ridiculous levels across the U.S., "affordability" came to be the code word for gimmicky, high-interest subprime loans lavished on the riskiest of borrowers in order to get them into a mortgage that would soon be bundled and shipped off to the suckers on Wall Street.

Unfortunately for borrowers and investors in Countrywide's mortgage paper, the American Dream of home ownership quickly morphed into a nightmare. Default rates surged, followed by the inevitable foreclosures, and mortgage paper backed by Countrywide loans became as valuable as post-bubble, dot-com stock options. Countrywide was only spared the ignominy of bankruptcy when its longtime sugar daddy, Bank of America (NYSE: BAC), stepped in to take it out.

As captain of this sinking ship, CEO and founder Mozilo was, for a time, very vocal in defending his company's legacy. But like so many others in America's great housing bubble, talk was one thing, and actions were another. As the housing bubble began peaking in 2003 and 2004, through the period when Countrywide's risky lending fell apart, Mozilo engaged in one of history's greatest stock dumps, selling more than $480 million worth of shares, according to the tally of insider filings on secform4.com. This graph tells the tale.

Alan Greenspan
If not the boldest of the group, then at least the most public, Greenspan, the man many are now blaming for the housing bubble (there were a brave few that piped up years ago), has refused to go quietly into his well-padded retirement. The man charged with providing the country with a financial voice of reason fell far short, so much so that it might be comical if it weren't so tragic.

Greenspan's denial of the possibility of a housing bubble has been widely derided in the past year, but a single statement could be excused as human error. However, a quick scan shows that this wasn't a single event. He also promoted the adoption and expansion of adjustable-rate mortgage (ARM) products in early 2004, when short-term rates were at or near historic lows. That same year he claimed, "securitization by Fannie and Freddie allows mortgage originators to separate themselves from almost all aspects of risk associated with mortgage lending." And separate themselves they did, ceasing to perform any kind of due diligence as to the ability of borrowers to pay for the homes they were buying.

Now retired from his role as the nation's monetary conscience, Greenspan continues to espouse his, er, theories on the financial crisis through editorials in which he denies any culpability for the events of the past three years. He is also applying his experience and insight as an advisor for Paulson & Company, a hedge fund which cashed in on billions of dollars by calling the collapse of the subprime mortgage market that Greenspan helped create.

An ignominious list
To be sure, there were many more complicit in this mess, including consumers who bought more house than they could afford. And though we have to move forward now, let's hope no one forgets what's happened here.

Thanks for listening.

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None of the authors of this article -- Bill Mann, Seth Jayson, Tim Hanson, Keith Beverly, and Nate Weisshaar -- owns shares of any company mentioned. Bank of America is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.