Taxpayers are bracing for what may be a huge bailout for Fannie Mae and Freddie Mac. Regulators are saying consumers may have to cough up $154 billion in tax losses thanks to the mortgage crisis.
But grimmer projections may be what this country will face. Many St Louis home mortgage professionals say the total bill may be twice the $137 billion already spent if our economy gets worse.
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.
Is there a silver lining? The best case scenario would be that Fannie and Freddie would lose almost $6 billion over the next 36 months but will probably still have to ask for about $70 billion for payments.
The actual loss may be about $18 billion but that would be if this economy gets better and the home prices stop falling in the near future.
But the cost could go up another $122 billion if the economy goes into what is called a double-dip recession and home prices dive twenty to twenty five percent lower.
Any further drop in home values would have an adverse affect on an economy that is already teetering.
The losses would mount upwards especially on the nearly 209,000 homes Fannie and Freddie have already foreclosed upon.
They already guarantee or own about 49 percent of this country's $10.3 trillion in home loans.
The Troubled Asset Relief Program (TARP) may cost a fraction of the $710 billion but the cost to bailout Fannie and Freddie may be more than taxpayers can bear.
However, the federal government has hoped the these companies would add some type of stability to this crazy housing market. They along with the FHA entity have backed or bought ninety percent of the new home loans.
But grimmer projections may be what this country will face. Many St Louis home mortgage professionals say the total bill may be twice the $137 billion already spent if our economy gets worse.
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.
Is there a silver lining? The best case scenario would be that Fannie and Freddie would lose almost $6 billion over the next 36 months but will probably still have to ask for about $70 billion for payments.
The actual loss may be about $18 billion but that would be if this economy gets better and the home prices stop falling in the near future.
But the cost could go up another $122 billion if the economy goes into what is called a double-dip recession and home prices dive twenty to twenty five percent lower.
Any further drop in home values would have an adverse affect on an economy that is already teetering.
The losses would mount upwards especially on the nearly 209,000 homes Fannie and Freddie have already foreclosed upon.
They already guarantee or own about 49 percent of this country's $10.3 trillion in home loans.
The Troubled Asset Relief Program (TARP) may cost a fraction of the $710 billion but the cost to bailout Fannie and Freddie may be more than taxpayers can bear.
However, the federal government has hoped the these companies would add some type of stability to this crazy housing market. They along with the FHA entity have backed or bought ninety percent of the new home loans.
About the Author:
When you need a principal reduction program, then visit Floyd Tapia's site at http://www.StLouisMortgageGroup.com. And to get the best St Louis home loan call us at 314-334-0210.
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