The Mortgage Market has been Nationalized

 banks, Housing  Tagged with: , , , ,
Nov 022009
 

While we fret about the nationalization of the health care market, the mortgage market has already been nationalized.

Thanks to NII for this email:

market-share-by-investor

The Federal gov’t– FED, FHA, Fannie, Freddie, Ginnie account for 96% of mortgage transactions in 2009. I shudder to think what USA residential real estate transactions would be absent this gov’t intervention.

Ginnie is doing all FHA mortgages, and the FHA is doing mortgages at 3.5% down. Banks are buying the Ginnie paper because banks do not have to post any reserves against that Ginnie Paper.  Banks have to set reserves of 20% for Fannie and Freddiemortgages, and between 50% and 100% versus non-gov’t. guaranteed mortgages.

Says the Federal Reserve Bank of San Francisco:

New mortgage loan originations considered “subprime” are taking back their pre-crisis market share levels, according to the most recent economic letter by the Federal Reserve Bank of San Francisco.

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