Fannie and Freddie Suffering - Who's Next?
Posted July 10, 2008 12:11 p.m. EDT
As if Consumer Confidence hasn’t already been hit hard enough, the GSE (Government Sponsored Entities) stock price story this morning should really impact consumers across the board. The two main purchasers of home mortgages in the US had their stock prices hit hard today on concerns that liquidity is becoming a problem for even the most stable of entities.
Wow – if Fannie Mae and Freddie Mac are having perceived issues, then who is safe these days in the housing market? Not only is consumer confidence at risk, but institutional confidence is at risk as well – the true foundation of the capital markets and housing industry.
The good news is that the Federal Reserve will not stand by and let the GSE’s fail or be put under intense pressure for any period of time. Systemic risk aversion is of the highest priority right now – for both industry leaders and consumers alike… but it’s important to realize that we must all be doing the right things in order to lead the housing industry back to the appropriate levels of supply/demand and consumer confidence purchasing patterns.
Disclosure and transparency in our industry must become the standard – educating consumers must be our priority so that they can make informed and educated decisions when it comes to choosing the correct and appropriate mortgage loan programs.
Jeremy M. Salemson
Corporate Investors Mortgage Group, Inc.