St Louis Lending: Billions Lost By Fannie Mae and Freddie Mac

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St Louis Loan Audit News: Taxpayers Brace For Fannie Mae and Freddie Mac Losses
St Louis Home Mortgage and Commercial Loans | Principal Reduction

877-334-0210 or 314-334-0210 | Floyd Tapia

Consumers are now worried that bailing out Fannie Mae and Freddie Mac will cost them about $154 billion under the most likely scenario for home prices, the mortgage giants' regulator recently announced.

But the bill could end up much greater nearly twice the $135 billion already spent if grimmer projections prove true and the economy slides back into a double-dip recession according to St Louis lending experts.

The projections, based on the results of a home-price "stress test" by the Federal Housing Finance Agency, offered the first public estimates of the final cost of the government's rescue of the mortgage-finance firms, which is on track to become the most expensive legacy of the 2008 financial crisis.

Under the regulator's most positive home-price scenario, Fannie and Freddie would lose $6 billion over the next three years and they would still have to ask the government for 11 times that amount to make dividend payments.

On its most likely projection which assumes an end to the housing crisis is close and that home prices will stop falling soon, it will still lose $19 billion during that same period.

On the other hand, if the economy slides back into recession and home prices fall by another 20 to 25 percent, the companies could cost taxpayers an additional $124 billion and that's before any dividend payments are made.

Another drop in values could prove fatal to this already dying economy leading to more delinquent borrowers with fewer options in stopping foreclosure.

Price declines could also lead to additional losses on the nearly 210,000 homes the firms have taken back through foreclosure.

Fannie and Freddie own or guarantee approximately 50 percent of the nation's $10.6 trillion in mortgages.

While the Obama administration has said the $700 billion Troubled Asset Relief Program could ultimately cost taxpayers a fraction of the initial investment, the tab for Fannie and Freddie has swelled to larger proportions as mortgage delinquencies have mounted.

Federal policymakers have relied heavily on the firms to help stabilize the housing sector, which together with the FHA have backed or bought nine in ten new loans this year, according to Inside Mortgage Finance.

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Articles and News Sponsored by Liberty Lending Consultants

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