Free Republic

No boom lasts forever, and in countries like Britain and Australia, the housing market has suddenly turned lower, leading to discussions of how a plunge can be avoided and what will happen if it is not. The American housing market received a scare yesterday, with a report that the pace of new-home sales slipped in November as the median price of a new home fell to the lowest level in a year. But mortgage applications indicate that a rebound has begun, and in any case, prices of new homes can fail to capture price trends for existing homes in areas...

WASHINGTON, Dec. 16 - Fannie Mae, the housing-finance giant, for years has fended off critics who contend that the company is too big, too powerful and too risky. But the Securities and Exchange Commission's Wednesday ruling, that Fannie Mae had seriously breached accounting rules, could touch off a chain reaction that results in stricter government controls, legislation limiting its growth and possibly even a change in top management. Democratic and Republican lawmakers alike demanded on Thursday that senior executives, including the chief executive, Franklin D. Raines, return tens of millions of dollars in bonuses and other compensation that they had...

For years, mortgage giant Fannie Mae has produced smoothly growing earnings. And for years, observers have wondered how Fannie could manage its inherently risky portfolio without a whiff of volatility.... The magnitude of Fannie's machinations is stunning, and in two key areas in particular they deserve to be better understood. By improperly delaying the recognition of income, it created a cookie jar of reserves.... Lower rates caused a lot of mortgage holders to prepay their existing home mortgages. And Fannie was suddenly facing an estimated expense of $400 million. Well, in its wisdom, Fannie decided to recognize only $200 million,...