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Source link: http://archive.mises.org/13032/real-estate-magnates-fannie-and-freddie/

Real estate magnates: Fannie and Freddie

June 21, 2010 by

The two government-created creatures to spur home ownership have turned into the largest homeowners in the U.S. of A. according to the New York Times. The GSEs combined portfolios were close to 164,000 at the end of March, a quarter where the entities took ownership of a home every 90 seconds.

“Our business is the American dream of home ownership,” Fannie Mae declared in its mission statement, and in 2001 the company set a target of helping to create six million new homeowners by 2014. Now Fannie is spending $10 million a month just to mow its lawns.

The taxpayers have propped up the two GSEs to the tune of $146 billion, the stocks of the entities were just de-listed from the NYSE and are now selling for pennies, but back in the day a few on Capitol Hill were defending Fannie CEO Franklin Raines and his “outstanding leadership.” Raines told congress that mortgage loans were “riskless.”

{ 4 comments }

Dave Albin June 21, 2010 at 3:43 pm

As a naïve homeowner during the artificial housing boom, I was silly enough to purchase homes I would reside in only (How old fashioned of me). What I didn’t appreciate at the time was that, as I moved around for jobs, etc. and sold and bought a few homes, I was “earning” money through loose monetary policy and people buying homes they should not have been buying. The result is that I have stable (hope) equity in my house while about 25% of homeowners are underwater. Then, you hear people blame the free market and lack of regulation for the housing mess and wealth concentration . Are people really that naïve and lacking in knowledge?

Walt D. June 21, 2010 at 5:02 pm

Don’t you mean “Loser Magnets”?

ninin June 22, 2010 at 12:36 am

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Christopher June 22, 2010 at 6:56 am

Catch 22 for the GSE’s. They’re trying their best to force lenders to buyback fraudlent loans on one hand yet they’re also being used as a conduit to force the banks to follow up with Obama’s housing preservation policies. The banks can’t buy back ALL the bad loans because they’ll go under and the Adminstration want’s their scheme to be successful so what happens is that most of the cost is transferred onto future taxpayers.

Consequently the actual # of loans being repurchased by the lenders are miniscule. Only the absolute worst of the worst.

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