Released on: September 11, 2008, 12:58 am

Press Release Author: Norman Bobrow

Industry: Real Estate

Press Release Summary: Fannie Mae and Freddie Mac, the mortgage giants of the United
States, have been taken over by the US government on September 8, 2008 until they
are both on stronger footing. The US government temporarily has gotten rid of the
CEOs of both companies and have legal rights of the companies.

Press Release Body: The recent and monumental government takeover of the Federal
National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac) did not come as a surprise or a disappointment to anyone
in the US, particularly those unfortunate homeowners who have tried applying for a
mortgage in the recent past. (Almost 10% of homeowners in the US are currently
either in foreclosure or at least behind in their payments.) Both companies were on
the verge of collapse, which would have sent rates skyrocketing and would have
frozen loans completely. Although this is certainly not a permanent solution for
the decline in the housing market, had the federal government not stepped in to
rescue Fannie Mae and Freddie Mac, US citizens would not have been able to acquire
loans for pretty much every aspect of their lives-home loans, business loans, and
consumer credit, amongst others. The $5 trillion companies have lost over $12
billion over the past year. In April and June alone of this past year they have
accumulated over $3 billion in losses, and both Fannie Mae’s and Freddie Mac’s
stocks have fallen by over 20% of late.
Fannie Mae was originally established in 1938 by Franklin Delano Roosevelt in order
to provide banks with enough cash flow so that they in turn could provide home
mortgages and raise the level of home ownership in the US. Freddie Mac was created
in 1970. It’s goal was to increase the secondary market for mortgages, which at the
time was monopolized by Fannie Mae.
The government’s plan is to temporarily place Fannie Mae and Freddie Mac into what
it called a conservatorship and supervise the two mortgage leviathans until they are
capable of once again maintaining themselves. Some predict that this change won’t
affect, say, those companies selling href=”http://www.normanbobrow.com/browse_by”>Manhattan Office Space. It will
mostly affect the California real estate market.
Fannie Mae and Freddie Mac will both be open for business as usual with some slight
changes.


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