Freddie Mac and Fannie Mae could return to making revenue

After years of dismal performance, mortgage houses Freddie Mac and Fannie Mae finally have some good news attributed to them. The two troubled firms are creeping back toward solvency. The government had to take control of the two troubled firms in 2008, and has lent both houses collectively more than $130 billion. However, dark clouds are on the horizon. The government intentions to possibly get rid of the two government sponsored enterprises and a fresh round of foreclosures is on the horizon.

Staying in business is the goal of Fannie and Freddie

During the federal bailouts that have been happening, Freddie Mac and Fannie Mae have gotten a lot of the money. Between the two home loan companies, $130 billion was lent. This was so the real estate sector would not go under. However, the two toxic corporations are starting to hemorrhage less money, according to ABC. During the last quarter of 2010, the period from Oct to December, Fannie Mae posted a loss of only $2.1 billion and Freddie Mac posted a loss of only $1.7 billion. In 2009, during this same quarter, the deficits were much heavier. Freddie posted $7.8 billion in deficits while Fannie had $16.3 billion in losses. However, Fannie and Freddie have both requested additional loans, with Fannie asking for a further $2.6 billion and Freddie seeking another $500 million.

Stopping the home loan titans from ruling

Freddie Mac and Fannie Mae are really well known. The real estate industry has needed them. The 2 corporations purchase home loans and resell them as investments to be able to free up capital for loan companies to lend more mortgages. The government is attempting to discover ways to get Freddie and Fannie out of the mortgage sector. Just reducing involvement might help a lot. Treasury Secretary Timothy Geithner has admonished Congress to have a serious plan ready before attempting to vote on anything, in accordance with USA Today. The housing finance industry might get destabilized while the real estate market might have other difficulties from these programs getting cut, Geithner warned. Geithner thinks a gradual program should be used. This is if a program is used at all.

Darkest before dawn

It’s anticipated that Fannie and Freddie won't get much better. They are expected to get hurt even more soon. Though Freddie and Fannie own roughly 50 percent of all mortgages in the United States, and 90 percent of all mortgages originated in the past few years, there’s a growing backlog of foreclosures that cannot be completed until foreclosure reforms linked to the “robo-signing” scandal are resolved. Reuters explains that Freddie and Fannie will not make too much of a difference to housing prices, states Geithner. He expects that the prices will go up a little bit. So that greater stability is there, home buyers are being told to put down more money on homes because of housing conditions.

Information from

ABC News

abcnews.go.com/Business/wireStory?id=12995329&page=1

USA Today

usatoday.com/money/economy/housing/2011-03-01-fannie-freddie-geithner_N.htm

Reuters

reuters.com/article/2011/03/01/us-usa-housing-geithner-idUSTRE72000P20110301?pageNumber=1