Gladiator

With the current Wall Street Investment problems, of 9-26-08, perhaps we can look back to see what happened, and what the trends might be for the future.

Congressman Ron Paul recently stated:

"Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?"


Commercial Mortgages covered by Freddie:

Freddie Mac: Investment Property Mortgages


Recovery options for Freddie Bond and Share Holders

www.InvestmentFraud.PRO: Recovering Fannie Mae & Freddie Mac Investment Losses Through FINRA Arbitration Lawsuits


"NEW YORK, Sept 26 (Reuters) - Freddie Mac, the second-largest provider of funding for U.S. mortgages, said on Friday its investment portfolio fell at a record rate in August as it curtailed mortgage purchases to conserve its capital.

The portfolio dropped by an annualized 56.2 percent rate, the largest percentage drop on record, according to a company spokesman. The portfolio shrank to $760.9 billion in August from $798.2 billion in July.

These retained mortgage holdings are still up by an annual rate of 8.3 percent year to date, having ended 2007 at $720.8 billion, the McLean, Virginia-based company said in a statement.

Policy-makers consider the company critical to stabilizing mortgage lending rates and it was put into government conservatorship this month due to concerns about its capital.

As home prices have tumbled at a record pace this year, few private sector lenders have been willing to provide home loans unless they could sell those mortgages to Freddie Mac or the country's leading home finance company, Fannie Mae.

However, after reporting four straight quarterly losses, Freddie Mac had said that it would be more conservative in managing its capital, including paring its purchases of loans and mortgage bonds for its portfolio.

Its purchase and sales agreements for future months fell in August, sliding by $15.4 billion after declining $324 million in July. In June, these purchase and sales agreements had jumped almost $35 billion."

UPDATE 2-Freddie mortgage portfolio drops at record pace | Markets | Markets News | Reuters


Freddie Shares dropped from $65.88, 10/07 to $2.00 today.

Bloomberg.com: Investment Tools


So Freddie was investing in more than just home mortgages. So President W Bush's words, "Imprudent ivestments" as the cause of Freddie to fail, included "Outside the purpose scope" investments, speculation and cooking of the books:

"Billionaire investor Warren E. Buffett sat in front of a video camera in Omaha, spelled his name for the record and minced no words as he testified for the government yesterday in its case against former Freddie Mac chief executive Leland C. Brendsel.

Brendsel is accused of presiding over accounting manipulations and running Freddie Mac in a reckless manner. Buffett, one of the most successful and revered investors, sold a huge stake in the mortgage funding company before the manipulations came to light, and the government wanted him to explain why. Buffett said he was troubled in part by a Freddie Mac investment that had nothing to do with its business."

Buffett Testifies That He Saw Early Signs of Freddie Mac's Woes - washingtonpost.com


Max Geiser ( Spelling) journalist from Paris, speaks on You Tube, and predicted further meltdowns of the US Dollar, with US Taxpayer bailouts, as wall street collapses.

http://www.debatepolitics.com/econom...errorists.html (Money Terrorists.)


It may be important to better understand why Freddie faile, to better understand the rest of the future plans of the Wall Street manipulators.





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How did Our Oil get under Their Sand?

Gladiator

2001 problems, manipulation with Wall Street.

"Federal regulators released a scathing report Wednesday on the corporate culture that fostered improper accounting at Freddie Mac, the same day that they announced that the company had agreed to pay a $125 million penalty and to take measures to prevent future misconduct.

The settlement and the report may help Freddie Mac, the nation's second-largest buyer of home mortgages behind its corporate sibling, Fannie Mae, to recover from an accounting scandal that surfaced early this year. But some of the report's recommendations suggest that regulators may impose new restrictions on the company. They also suggest that regulators will now shift their focus to the Wall Street firms that engaged in certain transactions with the company and to accounting at Fannie Mae.

The report by the Office of Federal Housing Enterprise Oversight does not shed much new light on the transactions at the center of the improper accounting, which sought to smooth out earnings volatility, but it is much harsher than previous reports in its assessment of Freddie Mac's executives and board members."

Market Place; Freddie Mac Gets Penalty And Rebuke Over Scandal - New York Times


11-15-03 Leland C Brendsel Rsigned:

"....of Freddie Mac. The company, which is the nation's second-largest buyer of home mortgages behind its corporate sibling, Fannie Mae, is trying to recover from an accounting scandal that led to the resignation of its former chief executive, Leland C. Brendsel, in June."

Freddie Mac Narrows List For New Chief - New York Times
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Gladiator

"That chief executive, Richard F. Syron, in 2004 received a memo from Freddie Mac’s chief risk officer warning him that the firm was financing questionable loans that threatened its financial health.

Today, Freddie Mac and the nation’s other major mortgage finance company, Fannie Mae, are in such perilous condition that the federal government has readied a taxpayer-financed bailout that could cost billions. Though the current housing crisis would have undoubtedly caused problems at both companies, Freddie Mac insiders say Mr. Syron heightened those perils by ignoring repeated recommendations."

http://www.nytimes.com/2008/08/05/bu...05freddie.html

From 8-5-08

"CEO Richard Syron ignored warnings four years ago that Freddie was taking on too much risk by underwriting poor quality mortgages and that its capital base was too thin."

"Syron claims that he received enormous pressure from an un-named lawmaker pushing Freddie to take on the bad loans. So the Times reports that as Syron and others sat in a conference room reviewing the memo, Syron "refused to consider possibilities for reducing Freddie Mac's risks. He said we couldn't afford to say no to anyone."


Start bailing out Freddie Mac with Richard Syron's $38 million - BloggingStocks

Syron Testimony for 1992, as Fed Reserve Officer:

Statement by Richard F. Syron, President, Federal Reserve Bank of Boston, Before the Committee on Small Business, U.S. House of Representatives, July 2, 1992 - Statements to the Congress - Transcript | Federal Reserve Bulletin | Find Articles at BNET


"Syron yesterday defended his loan decisions, arguing that Freddie needed to take additional risk to meet its government mandate to provide affordable housing. Although a private company, Freddie Mac was created by Congress to expand mortgage credit and home ownership.

"If you're going to take aid to low-income families seriously, then you're going to make riskier loans," Syron said in an interview yesterday. "We have goals to meet."

Syron added the cause of Freddie's problems isn't those loans, but a deep and extended housing downturn, spreading into the broad mortgage market. US home prices are falling for the first time since the Great Depression, and the economy is weakening, affecting even creditworthy borrowers."

Syron's side of the story - The Boston Globe










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Gladiator

"Indeed, the quotas for Freddie's mortgages reserved for "underserved areas," (which are officially defined as "low-income census tracts or in low- or middle-income census tracts with high minority populations"), have been raised from 21 percent during the Clinton Administration to 39 percent during the Bush Administration.

Syron prides himself that he was more dedicated to "affordable housing" than to prudence with the taxpayers' money.....

What could possibly go wrong with lending money to people who wouldn't qualify for credit without the government leaning on the lenders? I mean, besides all the trillions in stimulation making "affordable housing" unaffordable without trick mortgages concocted around the assumption that home prices can only go up? ...


"But to meet affordable housing goals, Freddie had to engage in activities that helped push house prices higher, and thus more unaffordable? And the more their numbers indicated that Freddie was dedicated to affordable housing, the more housing was allowed to balloon artificially?


VDARE.com: 08/10/08 - Freddie Mac’s Richard Syron—Architect Of The “Diversity Recession”

Syron made more riskier loans, to fulfill the mandate from Congress to provide more affordable housing, but this created a false demand, which artifically drove up housing prices, which had to be made more affordable by less secure loans. Then the house of cards fell down when investors were not able to get a return on their investments, because the housing for the poor could not be maintained when housing prices began to fall, because the artificlly high prices of homes started to come down, Maybe?

But Fannie and Freddie only gurantees up to a certain range or lovel, of the mortgage loan value, so maybe there is other paper that guarantees, like Credit Default Swaps, that guarantees additonal parts of the mortgage, over what Freddie guaranteed?


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Gladiator

Alphonso Jackson Resigned HUD, 3-31-08. Jackson had oversight of Freddie, and had encouraged making mortgage loans to alleviate poverty. Unfortunately making loans to the poor, artifically incereased housing prices, for a while, then came down, causing disruption for moderate income Americans. Freddie stock prices became drastically reduced in value, by 95%, and money for middle class housing loans has become scarce.

"Jackson, 62, has been fending off allegations of cronyism and favoritism involving HUD contractors for the past two years. The FBI has been examining the ties between Jackson and a friend who was paid $392,000 by Jackson's department as a construction manager in New Orleans after Hurricane Katrina.

The HUD chief made no direct mention of that in his resignation statement. Explaining his move, he said: "There comes a time when one must attend more diligently to personal and family matters. Now is such a time for me.....

"On Monday, Jackson said he has spent more than 30 years of his life improving housing opportunities for all Americans regardless of income or race.

"My life's work has been to build better communities that families are proud to call home," the embattled housing director said.

Jackson said he is staying on three more weeks to ensure an orderly transition of the leadership of HUD.

His statement offered an upbeat review of his own record.

He said he and his team at the housing agency had helped families keep their homes, reduced chronic homelessness and "transformed public housing."

Democratic Sen. Patty Murray of Washington state, who had called on Jackson to step down, said the resignation "means little to the millions of homeowners struggling to stay above water. What they care about most is meaningful action from an administration that so far has responded to Wall Street but not to Main Street."


"In 2006, Jackson triggered the IG inquiry when he said publicly that he revoked a contract because the applicant who thanked him said he did not like President Bush.

Jackson later told the IG's investigators that "I lied" when he made the remark about taking back the contract."

HUD Secretary Jackson resigns : News : WHOI HOI-19








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Gladiator

Loans that Failed. FHA incured loans less easy to qualify for.

"Now, many of you know that the FHA had fallen out of fashion. Subprime loans were all the rage. Many subprimes were sound when issued, and still are.

But many first-time homebuyers, including low-income and minority families, found themselves steered into low "teaser" rate loans that hid the devastating true costs.

In some cases, buyers didn't even have to reveal their income or pay a downpayment to qualify. One lender even bragged about his NINJA loans: "No Income, No Job, No Assets" required.

This threatened to give the entire real estate industry a bad name. But now we're back to basics. Blocking and tackling. Savings and credit ratings. Fewer shortcuts.

As one newspaper wrote, "The FHA is a little old-fashioned in some respects. Be prepared to document your income, assets and debts." You're darn right!"


Remarks prepared for Alphonso Jackson, Secretary of Housing and Urban Development - HUD





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Gladiator

One indicator of the reality of the situaition is the number of homes taht Fannie Mae has foecosed upon, and still owns, hoping to get a better sales or income from a property, than provided by the current market.

"This has left Fannie Mae in a position it does not want to be in. The company as a matter of policy does not want to own houses or be a property management company. But the housing crisis has left Fannie Mae as the owner of 54,173 properties as of June, according to the company's most recent filing with the government."

Fannie, taxpayers become partners - Washington Post - MSNBC.com


Accordingt to other published figures, Total for Fannie and Freddie, was 9007 homes owne in June, 2007, and 20,628 homes owned in August 2008.

Fannie and Freddie Own 44% Of Foreclosed Homes | Housing Doom





8-3-08 Chicago Tribune:

"As home prices decline, unsold properties are a problem for creditors like Fannie Mae because taxes, insurance and repairs drain their cash. Fannie Mae acquired twice as many homes through foreclosure as it sold in the first quarter, regulatory filings show, and late payments on its home loans—a harbinger of foreclosures—almost doubled in the past year.

"Progress on this is probably one of, if not the single most important economic process right now," said Moshe Orenbuch, managing director of equity research at Credit Suisse Group AG in New York. "With prices decreasing, it's better to get rid of houses quickly."




Fannie faces glut of unsold homes -- chicagotribune.com




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Gladiator

Search Unsold Houses

Here is a link to figures of total US unsold house inventiory, comapred for 2004, 2005, 2006, and 2007. The usold house inventory declined from Jan to April, 2004 and after April 2004 to June 2007, usold houses have been increasing, since then.

Calculated Risk: Unsold houses pile up


January 10, 2006, analysis of the start of the increases in numbers of US Unsold Houses. This suggests that the 2003 to 2004 housing boom, created a momentum for housing construction, that did not slow down, as quickly as might be suggested by market figures. This may be becuase many housing projects are planned years in advance, and the inverstment of capital to build houses is committed years in advance. Son part of the increase in usold houses is a result of houasing construction was planned during the boom years increases in demand for lhousing.

"The only reason there isn’t a glut so far this time [1-10-2006] is that the rate of sales remains strong. But if the rate of housing sales drops, the inventory is likely to pile up faster than builders can dial back on construction. That’s what happened in 1991, when the inventory of new homes topped out at more than nine months’ supply. Now, with a lot more homes in the market, it’s easy to imagine the ratio of inventory to monthly sales getting even higher."

More and More Unsold Homes - BusinessWeek


Total US Unsold Hosing Inventory figures for April, 2008 indicate a weakening of demand for houses, and csequently more difficulty for lenders to sell defaulted mortgaged properties.

"The inventory of unsold homes jumped 10.5% to 4.55 million. Inventories represented an 11.2 month supply at the April sales pace, the highest since the records began in 1999. For single-family homes alone, the inventory rose to 10.7 months' supply, the highest since 1985."

Unsold houses rise to 23-year high in April, realtors say - MarketWatch

The current bailout being written in the US Congress, 9-27-08, may make sense in terms of the current excess US House inventory, created both by teaser mortgages, and the building construction boom, created by the increased demand that was created by the Teaser Morgages.

Hoover bought usold houses in 1929, resold for a profit in later years. US Taxpayers did not lose form Hoover's purchase.

Yahoo! Message Boards - Mastercard Incorporated (MA) - HOOVER BOUGHT UNSOLD HOUSES IN 1929


Bush has over-borrowed to pay for two wars and single family houses houses for the US poor. Was Bush trying to convert poor, apartment dwelling Democrats, into home owning Republicans? Bush is trying to create Western Style Democracies in Iraq and Afghanistan, if not also Iran. Bush's excessive borrrowing may have created a house of cards that will fall further. Hoover's housing buyout in 1929 did not prevent the Great Depression.

Biography of Herbert Hoover


"Compassionate conservatives recognize that those without economic means need assistance, but they believe that the way to do that is to create the conditions that allow more individuals to become homeowners. Rather than providing public housing, government can offer low-cost home loans or help people with down payments "

Hoover Institution - Hoover Digest - What Compassionate Conservatism Is?And Is Not





Housing has not been managed by US corporate employers, very much. Maybe company mining towns, as an exception. But it would save energy if employees lived closer to work, and housing might be better managed by corporate employers. There would be a social advantage for comapnies to provide living quarters close to work, for their employees, in saving gasoline and pollution. There might be less housing fluctuation pressures, if Corporations took a greater resonsiblity for housing its employees. So tax incentives for companies to provide close by housing for workers might make sense.


How about this cycle: More illegal contruction workers were needed to bujid more houses. More illegal construction workers came to the US. and built more houses. The illegal workers needed someplace to live, so they rented houses. Soe More investers bough tmore houses to rent out. Then The US startted cracking down on illegal workers. The illegal workers went home, and stopped renting houses. The ivestors could no longer rent the houses, so they put the houses on the market. So the number of US unsold houses started increasing. Then the House prices started falling, and the cash strapped people, poor people and over-stretched investors, let their house mortgages default. The Mortgage companies then had even more houses to sell, and they could not sell the houses rfast enough, and have to keep or try to rent the houses, or wait for a particualr house to match what a house buyer needs.





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Gladiator

Hewre is a Link to a Breaking News thread started in July, 2008, about the stock market disrutpions attributed to Freddie:

http://www.debatepolitics.com/breaki...two-years.html (Fannie, Freddie send Dow below 11,000 for first time in two years)




Hers ia an article which describes a Texas suburb's attempts to curg illegal immigrant renters, and shows that illegal renters are not prohibited from renting, in very many parts of the US.

"They're seeking a temporary restraining order to keep Farmers Branch from requiring prospective apartment and house renters to obtain a city license. The requirement is part of an ordinance set to take effect Saturday. Under the rule, the city would forward information from the license application to the federal government for verification of a tenant's immigration status."

Foes of illegal immigrant rental ban ask restraint - Examiner.com

HispanicTips Atlanta-area county to delay illegal immigrant rental ordinance - Cherokee County, Georgia

"A Dallas suburb's ban on apartment rentals to illegal immigrants, an ordinance passed by city leaders and later endorsed in a vote by its residents, is unconstitutional, a federal judge found Wednesday.

Only the federal government can regulate immigration, U.S. District Judge Sam A. Lindsay concluded in his decision.

The city didn't defer to the federal government on the matter, violating the supremacy clause of the U.S. Constitution, which allows for the federal government to pre-empt local laws, Lindsay said."


FOXNews.com - Judge Rules Texas Town's Illegal Immigrant Apartment Rental Ban Unconstitutional - Politics | Republican Party | Democratic Party | Political Spectrum


Where have the 10 to 20 Million US undocumented workers in 2005 been living? Were they renters? Have some of the illegal immigrants gone home, and reduced the demand for the US Rental Housing market?

http://www.bearstearns.com/bscportal...nderground.pdf


Housing Starts influenced by innacurate assesment of the illegal work force, Page 3, Bear Stearns, 2005.

Immigration enforcement, and perception of enforcement had declined considerably from 2000 to 2005, during the first part of the Bush 8 year Term. P 5, Bear Stearns, 2005.


Page 8 describes how Gateway cities demand for housing has increased. Gateway cities are where illegla immigrants enter the US. ther are underground sujport services for illegal immigrants in Gateway Cities. Ther are often over-crowded apartments when illegal immigration is increasing. as Illegal immigrants gain success, they can rent single family homes. There is a fluid movement based upon the increase in illegal immigration, and the increas in demand ro rental of single family homes. There is also a correltation between enforcemtner agaisnt illegal immigrants, the perception of enforecment risks, and a decrease in demand for single family homes. Thes pressures are difficult to measure, because illegal immigration is done secretly.












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Gladiator

In 2008 Enforcement against illegal immigrants has increased, and part of the decrease in demand for single home rental units has probably been from illegal immigrants returning home.


"It is sometimes argued that illegal immigrants are so permanently attached to their lives in the United States that no amount of enforcement would ever make a large share of them return to their home countries. The findings of this report tend to contradict that view. Monthly data collected by the Census Bureau show a significant drop in the number of less-educated, young Hispanic immigrants in the country. Prior research indicates that more than three-fourths of these individuals are illegal aliens. The fall in this population implies that the illegal-immigrant population has declined [to Mid 2008] some 11 percent or 1.3 million since hitting a peak in August 2007"

Homeward Bound: Recent Immigration Enforcement and the Decline in the Illegal Alien Population | Center for Immigration Studies


Ronald Reagan's Mexico City Policy Love Children.


June 2002, Bush Said:

By a significant margin," the Decider went on in June 2003, "minority families are less likely to own their own homes..." And so "the goal," as Bush had explained 12 months earlier to the Department of Housing & Urban Development (HUD), "is everybody who wants to own a home has got a shot at doing so."


Dry Rot in Bush's Housing Plan


Bad Mortgage Investments were Bush's plan, at least as early as June, 2002.






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