It is not the time yet for Fannie Mae, Freddie Mac – it will in 2012 when the two will go belly up – billions from Government will them afloat for now
Joe Weinman
Jul. 12, 2008

The shares of Fannie Mae, Freddie Mac reached the lowest level in more than 17 years yesterday, making it tougher for them to raise capital at a time when they account for about 80 percent of mortgages packaged into bonds.

A failure of the companies would likely send home loan rates higher, causing further declines in home sales and prices. But the failure is not in the cards for now.

According to sources, the Federal Government and the Federal Reserve will support these two largest providers of U.S. mortgage financing for now. Till 2012 these two will slide along. As a matter of fact they can be an excellent buy right now.

The problem will come in 2012 during the next presidential election when the focus will be reduction of budget defect. It is not the time yet for Fannie Mae, Freddie Mac – it will in 2012 when the two will go belly up. Fannie Mae and Freddie Mac own or guarantee about half the $12 trillion in U.S. home loans outstanding.

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