Fannie loses $1.4B in 3Q, warns on '08

[RobertB]

Fannie loses $1.4B in 3Q, warns on '08

By MARCY GORDON, AP Business Writer 57 minutes ago

WASHINGTON - Fannie Mae's third-quarter loss more than doubled to $1.4 billion, the mortgage finance company said Friday, while forecasting industry troubles through 2008 because of mounting home loan delinquencies.

Shares of Fannie Mae, the largest U.S. buyer and backer of home loans, recovered from a decline of more than 9 percent early in the day to finish at at $49, a decrease of 80 cents, or 1.6 percent.

http://news.yahoo.com/s/ap/20071109/ap_on_bi_ge/earns_fannie_mae;_ylt=Al.sfxEli1NoKC0.hNofZLuyBhIF

[felixthecat]

From the link:

Fannie Mae's results clearly showed the ravages of the collapse in high-risk mortgages and ensuing credit crisis of last summer, which rattled global markets, forced more than 50 lenders into bankruptcy and recently battered Wall Street powerhouses Merrill Lynch & Co. and Citigroup Inc.

...

An estimated 2 million to 2.5 million adjustable-rate mortgages, worth some $600 billion, are "resetting" this year and next, jumping from low "teaser" rates for the first two or three years to much steeper rates that could cost borrowers their homes.

Fannie Mae said that as of July 31, it estimates there were about $185 billion in adjustable-rate mortgages tied to high-risk, subprime securities scheduled to reset next year. "These resets could result in a further sharp increase in delinquency and foreclosure rates," the company said.

http://news.yahoo.com/s/ap/20071109/...0.hNofZLuyBhIF

That's RIGHT.

The "teaser rates" are disappearing with the ARM's and

people can't afford to pay the higher rates they signed up for!

The "teaser rates" is what got them their home. The rates are going UP and typically you can't refinance this stuff.

Another problem are "home equity loans". Silly people take out the equity to pay bills and have NOTHING. They might as well rent. But they have to have the expensive vacations, great cars, great toys for the kids and on and on it goes. People have to stop this. It's going to catch up with them.