Has The Clock Ran Out on Fannie Mae??

Washington Law Makers are asking the question, is Fannie Mae too big? It has taken some of the worst losses in real estate lending, and continues to bleed money. The government took over Fannie and Freddie two years ago at the begining of the meltdown in hopes of stopping the bleeding. However, there is too much toxic assets on the books to clean up the balance sheets. So, now what?

Fannie Mae resently posted a $13.1 billion, yes BILLION, dollar loss in the first quarter and is asking for another $8.4 billion more of tax payer money. Now don't get me wrong, I understand that without goverment intervention we would be in full meltdown mode. But where does it end? Why are they not selling off some of this stuff to priviete investors, even if it is at a loss but get it off the books!

I think there is a direct link to not doing Short Sales, because if banks would complete the short sale process there would less issues in the real estate market. However, Short Sales take so long, and what I don't think the bank understands is that the price will drop dramiclly when it becomes a foreclosure. It seem as they don't care. Short Sales can take upto 6-8 months, I have heard longer, to complete. Streamline the short sale process and you would not have the bleeding you have now!

But the time may have come to break up Fannie Mae/Freddie Mac. The government should not be involved forever, but they truly are to big to fail! I say devided them up into fourths to spread the risk out. At least then you can put the worst loans with one company, not so bad with another and so on. Watch the roots of the meltdown at PBS.org/Frontline series. There are four shows, I recomend you watch them in this order: The Warning, Inside the Meltdown, Breaking the Bank, and Close to Home. They are all about an hour long, and just great info on the meltdown.

The time may be right to break up Fannie and Freddie, divide the assets and see if we can save the the tax payer money! If Fannie has a first quart loss of $13.1 billion, what will the second quarter be? With more looming foreclosures, how bad will it be then??

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