Appraisers' Free Forum

I was watching/listening/dozing during Fox Business News this afternoon. Four different financial big-shots offered the opinion that Fannie and Freddie should be broken up into ten different units like the Federal Reserve, and Fannie/Freddie should be dissolved.

Dick Bove said that the debt burden of Fan/Fred equals the national debt, so the government should NOT buy their stock to shore up their prices. Doing so would be an explicit assumption of their debt. He said the best thing that could be done is to dissolve both of them. He even predicted that this time next year, there won't be any Fannie or Freddie.

Jim Plante wrote:I was watching/listening/dozing during Fox Business News this afternoon. Four different financial big-shots offered the opinion that Fannie and Freddie should be broken up into ten different units like the Federal Reserve, and Fannie/Freddie should be dissolved.

Dick Bove said that the debt burden of Fan/Fred equals the national debt, so the government should NOT buy their stock to shore up their prices. Doing so would be an explicit assumption of their debt. He said the best thing that could be done is to dissolve both of them. He even predicted that this time next year, there won't be any Fannie or Freddie.

What would make up the secondary market if this happens?

Maybe non-GSE investors, who would probably be more finicky about what they were considering buying.

I've had at least two independent investors in my small rural area to request drive-by appraisals on properties whose notes they were considering buying. They didn't want the occupant to know they were looking at them, so they ordered "no contact, no interior inspection." Since they were both commercial premises open to the public, we made a cursory interior inspection pretending to be potential customers. I don't know the final disposition, but both assignments paid good fees, $1K±.

There's a possibility that the ten Fannie fragments might continue to offer secondary market purchases, but they'd be more tightly regulated, and would function without the government's backing. Since they're smaller, they'd be easier to monitor and control.

Bill Caudell wrote:What would make up the secondary market if this happens?

They call it the free market. We used to have one in this country before the New Deal... well, free-er, anyway.

No more Fannie/Freddie? Sorry, Jim... it was a dream too good to be true.

http://www.nytimes.com/2008/07/24/busin ... ?th&emc=th

But, there are a few Republicans who are really Republicans left... at least when it gets close to election time...

Republicans said they would not support a bill that puts taxpayer money at risk while potentially bailing out irresponsible borrowers and greedy lenders.