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To: MineralMan

"There is going to be great wailing and gnashing of teeth among those homeowners.."

There may also going to be great wailing and gnashing of teeth among us taxpayers. I wonder how much liability Fanny & Freddie are on the hook for?


14 posted on 05/03/2006 11:29:57 AM PDT by Pessimist
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To: Pessimist
Freddie and Fannie won't be buying loans from subprime lenders like Ameriquest. Nor will they be purchasing No Doc, No Ratio, Option ARM's, or any of the other creative financing products that have provided (in my opinion) the steroids that have inflated property values.

Where Freddie and Fannie could be on the hook, are areas where you have seen large property appreciation and borrowers in turn have converted that equity into debt via cash out refinances and 100% purchase loans. I have seen loans made to folks who now owe $50-60,000 more on their homes than what they purchased them for 3-4 years ago. These loans are approved by Fred and Fan via their computer scoring sytems and once the loans are closed sold to them. There are a lot of new cars on the highway today that owners will still be paying for years after they have found their way to the junkyard. The amount of current mortgage debt that has to be repaid is unprecedented, how these loans perform will be interesting.

18 posted on 05/03/2006 11:51:57 AM PDT by Subsonic22
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