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Weekend Links: Feb 25-27

Housing News for Friday through Sunday, most recently added first. Feel free to contribute your own finds in the comments :)

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2 Comments

  1. twist twist

    John-

    I read CNBC on the return of RMBS. I don’t see how that could be done without government guarantees [that they shouldn’t be making.] or much, much higher interest rates. Do you?

    It makes me think that in the end, the government won’t really have the nerve to bury F&F. They’ll just be “reformed”.

    • John M. John M.

      Have a look at this:
      http://www.google.com/finance?client=news&q=fnm

      The present total market cap for F&F as of close of markets Friday was one billion dollars, close enough to spit — $999.79M, which is to say $0.001000 trillion. The two GSEs not only buy the majority of newly hatched mortgages (I think the total gov’t figure is 9/10ths of the market), but they “own” or “guarantee” something like $5.7 trillion, and counting, of legacy mortgage securities.

      Which is to say that the FHFA conservatorship is fictitious.

      Which also means that the conforming mortgage rate is 99.9999… percent US subsidized.

      But if Geithner stops buying F&F preferreds (essentially laundering taxpayers’ money through the two straw companies to pay for redemption of F&F bonds as they come due) Congress will have to explicitly choose between bailing out the bondholders and doubling the National Debt, and also explicitly socialize the US housing industry.

      This Sword of Damocles situation will continue until house prices re-inflate to near-bubble-peak levels, which could be a while. So GSE reform probably won’t gain traction for a while yet.

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