Posted on 10/14/2005 7:08:08 AM PDT by ex-Texan
If the housing market sputters, it's not just individual homeowners who will feel the jolt.
The legion of financial institutions that own mortgages will also get rattled.
Banks, thrifts and credit union lenders now hold only one-third of the $8.5 trillion in single-family mortgage debt outstanding. That's down from 44% in 1989 * * *
In the place of traditional lenders, government-chartered mortgage financers such as Fannie Mae (FNM) and Freddie Mac (FRE) have added volume to their loan books. They've pooled and sold off many of these mortgages to investors in the U.S. and abroad. * * *
And banks' increased reliance on such loans — they hold $2.85 trillion in single-family mortgages vs. $1 trillion in 1989 — means they might not escape a bubble burst unscathed. * * *
What happened to lenders after the last big real estate bubble burst is still fresh in the minds of many who lived through the early 1990s. * * *
Nationally, 1,569 banks and 1,273 thrifts during that period failed, the victims of high interest rates, speculative commercial real estate lending, regulatory changes and local employment shocks.
(Excerpt) Read more at investors.com ...
Interesting idea. Thank you.
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