We would like to think that the housing crisis is past and now all we have to do is wait for prices to rebound. Unfortunately foreclosures are still happening at higher-than-normal rates all over the country. That is putting pressure on the big mortgage funds. For example, according to MoneyNews.com;
Fannie Mae, the biggest source of money for U.S. home loans, on Tuesday said it needed a further $7.8 billion in federal aid to stay afloat as a shaky housing market widened its third-quarter loss to $5.1 billion.
Fannie Mae also attributed the deeper cash drain to losses on derivatives that are used to hedge the firm’s exposure to swings in interest rates and expenses related to home loans made prior to the 2008 financial collapse. In the year-earlier quarter it had a loss of a $1.3 billion.
Fannie Mae, seized by the government in 2008, has drawn $112.6 billion in bailout funds from the Treasury Department since 2008 and has paid $17.2 billion to the government in the form of dividends.
You can do the math. While it is possible that in time the government money will be repaid, it seems unlikely. That means you and I and all the other taxpayers will be footing the bill for bad mortgage loans for many years to come. Meanwhile the banks who made the bad loans get to keep their fees for all the junk they had guaranteed by Fannie Mae.
Stay tuned for round 120 of the unfolding mortgage mess.
