Jim Johnson

Everett Mortgage GSE Bailout Will Harm Seattle Mortgage Co



Posted: Wednesday, January 06, 2010

by Jim Johnson
Metropolitan Mortgage



Everett Real Estate Will Be Harder to Finance

Mortgage lenders and Everett real estate will see more difficulties in obtaining home loan financing. When the Treasury Department lifted the debt ceiling for Fannie Mae and Freddie Mac (GSE or Government sponsored entities) the Obama administration just made you liable for Hundreds of BILLIONS of dollars in more debt. Yes the most transparent administration yet did this on Christmas Eve hoping you wouldn't notice it.

I'll just bet you didn't know you had already bought $111 BILLION of GSE preferred stock did you? Back in September 08 the Bush administration at least put a $200 BILLION ceiling on the debt. Now Obama has lifted that to least $400 BILLION. $400 BILLION would buy a lot of Everett real estate. But really there is no statutory ceiling.  Preferred stock must be paid dividends but in order to pay those dividends (to you the new stockholder) they now have to borrow the money (from you the taxpayer) to pay you the citizens of America dividends. Sound like a cluster you know what?

Now why do they need to borrow more money when they didn't spend the original $200 BILLION? Good question. They did it because the Treasury Department has directed the GSE's to invest in bad money losing strategies in loans modifications. The same loan mods that are impeading the recovery. The same loan mods that are actually hurting the borrowers.

Do you remember Enron? The energy company that had BILLIONS in bad "off the books" investments. They were off the books so the stockholders and bankers couldn't see how bad the financials really were. I'll be you guessed it already. Yup the GSE's are keeping the bad debt loan mods off the books. That is so our political class doesn't have to tell you they are now starting ANOTHER REAL ESTATE BUBBLE.  This is why mortgage lenders and Everett real estate will see more difficulties in obtaining home loan financing. Soon nobody in their right mind will invest in a mortgage backed security (MBS). If no one will buy a MBS then there will be no money to finance homes for sale Everett.

This is all being done to try and keep the democrats in power in Washington, D.C.

Since the Treasury Department has announced that as of the end of March 2010 they will no longer buy MBS I can see how the real estate market will tank on April 1st (great timing). Now because there is no ceiling on the GSE's debt they can replace the Treasury Department and keep the market going at least until 2012. I'll bet you can think of at least one thing scheduled to happen in November of 2012. And I'll bet you didn't know that Barney Frank and Chris Dodd have another surprise for you, the taxpayer. That's right more debt. Soon the national debt will dry up all funds for any Seattle Mortgage Companies. Mortgage lenders and Everett real estate will have no money and we will have another major crash.

Everett-mortgage-on-line

Jim Johnson E.A. retired; (Enrolled Agent, licensed to practice law in tax court) BS -19+ year experience as an independent loan officer. My background is extensive: 15 years as an Enrolled Agent Licensed to Practice law in tax court, Real Estate Agent 15 years, BS Accounting, Economics University of Wisconsin - Milwaukee.

In 2009 I ran for mayor of Everett, WA I lost but did receive 30% of the votes.

Currently I offer local political commentary in KSER Radio 90.7 FM every Wednesday at 9:05 AM.

Viet Nam Veteran

Everett Mortgage on Line

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