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Fannie Mae Gets Support, Verbal
July 11, 2008
With the backing of the Federal Government, Treasury Secretary Hank Paulson stated today the federal government believes that Fannie Mae (and Freddie Mac) are fine and that there is no need for any government bailout. That did little to calm investors as there stock slid 40% in early trading.
Investors are worried that the two largest GSE's (Fannie Mae and Freddie Mac) are insolvent. With rising foreclosures (especially in the California Home Loan market), these government backed lenders are loosing billions of dollars every month. Some fear if they collapse, the entire industry will soon follow as they purchase more than half of all mortgages created in the United States.
There is no doubt that the future of Fannie and Freddie remain bumpy at best. Some analyst question the current state of the two mortgage giants. Per Mr. Paulson, these two insitutions are "very important" to the health of not only the mortgage industry as well as the entire U.S economy. Because of this, most investors believe the government will step in at some point, it's just a question if the government will wait to long to secure their balance sheets. To stay on top of this issue, along with other mortgage information, please be sure to check our Mortgage Upates page.
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