Fannie Mayhem: A History (Wall Street Journal)

Ok - This is reprinted in total from today's Wall Street Journal (Opinion Journal) and I believe a very nifty "snapshot" of events that occurred over the past four years leading to what occurred this weekend:

Fannie Mayhem: A History

July 14, 2008




• Fannie Mae Ugly 07/12/08 – Investors continued to flee Fannie Mae and Freddie Mac almost as frantically as the political class tried to reassure everybody there was nothing to worry about.






• The Price of Fannie Mae 07/10/08 – It's time Americans understood the price they could soon pay for the Beltway's confidence game with these high-risk "government-sponsored enterprises."






• Too Political to Fail 04/21/08 – Fannie Mae and Freddie Mac aren't held to the same standards of accountability as everyone else.






• Fannie Mayhem 11/20/07 – Chuck Schumer is lucky Congress ignored his idea that Fannie Mae and Freddie Mac should ride to the rescue of the housing market.






• Fannie More 10/23/07 – Barney Frank and Chuck Schumer have come up with a proposal that would increase the risk to taxpayers from Fannie Mae and Freddie Mac.






• Fannie to the Rescue? 09/29/07 – Fannie and Freddie went up the Hill to fetch a pail of money.






• Freddie Krueger Mac 05/10/07 – Just when you think they're defeated, Fannie Mae and Freddie Mac arise in Congress to kill any attempt to clean up their dangerous habits.






• The Fannie Tax 04/12/07 – Democrat Barney Frank and the Bush Administration seem to have found common ground on new rules for Fannie Mae and Freddie Mac. Naturally, there's a catch.






• Memo to Fannie 06/14/06 – A joke in Washington these days goes like this: "What's the difference between Enron and Fannie Mae? Answer: The guys at Enron have been convicted."






• Freddie's Friends on the Hill 04/27/06 – The Federal Election Commission sheds some light on how Freddie Mac rewards its friends.






• Fannie Mae's House 10/25/05 – Every Congressional session can be counted on to produce its share of bad bills. But the "reform" bill for Fannie Mae and Freddie Mac is in a class of its own.






• Fannie's Friends on the Hill 05/09/05 – Congress finally seemed ready to protect taxpayers from Fannie Mae and Freddie Mac. Then Republican Mike Oxley decided to ride to their rescue.






• Fannie Turns a Page 12/23/04 – Fannie Mae – a slick, semiprivate firm operating with the patronage of politicians – is the kind of institution one still expects to find in a country like France.






• Fannie the Centaur 12/17/04 – Understanding their half-man, half-beast nature is crucial to fixing Fannie Mae and Freddie Mac in the wake of their recent financial scandals.






• Fannie Mae Liberals 10/14/04 – There were many moments of high entertainment during the House hearings on Fannie Mae's creative accounting. But our favorite was the Mister Magoo performance given by Barney Frank (D., Massachusetts).






• Fannie Mae Enron? 10/04/04 – The company was cooking the books. Big time.






• Fannie Uncovered 09/23/04 – The housing-finance giant has been engaging in some accounting funny business.






• Fannie's Risky Business 02/25/04 – Alan Greenspan puts his credibility behind the cause of reforming Fannie Mae and Freddie Mac.






• Christmas for Fannie Mae 12/23/03 – The Federal Reserve Board releases a new staff study about the impact of taxpayer subsidies for Fannie Mae and Freddie Mac.






• White House Fannie Pack 11/11/03 – White House chief economist N. Gregory Mankiw dares to tell the truth about Fannie Mae and Freddie Mac. The mortgage giants were not amused, which means we're getting somewhere.






• Fannie Takes the Hill 10/09/03 – When the House of Representatives can't get even a modest regulatory bill out of committee, the dangers of Fannie Mae become clear in reality.






• Speaking Truth to Fannie 03/12/03 – The president of the Federal Reserve Bank of St. Louis warns of a potential crisis arising from Fannie Mae and Freddie Mac.






• Fan and Fred Get the Business 02/19/03 – The year has not started auspiciously for the two mortgage-finance behemoths.






• Fannie Mae's Risky Business 09/23/02 – We've been suggesting that Fannie Mae was exposed to too much interest-rate risk. All of a sudden investors seem to agree with us.






• Fannie Capitulates, Sort Of 07/15/02 – Fannie Mae and Freddie Mac end months of resistance, stonewalling and downright crankiness and agree to register their common stock with the Securities and Exchange Commission.






• Fannie's Inside Info 07/01/02 – Even in this post-Enron world, Fan and Fred do not provide as much information about these securities as private mortgage lenders do.






• Inside Fannie 03/19/02 – Fan and Fred don't function like other companies. They're allowed to pile up debt, implicitly guaranteed by taxpayers, without being held to even the minimum of corporate governance standards.






• Frantic Fannie 02/28/02 – Companies taking on so much risk and debt, and backed by taxpayers, ought to be more transparent in what they tell the world.






• Fannie Mae Enron? 02/20/02 – Fan and Fred look like poorly run hedge funds: lots of leverage and snarkily hedged risk. Does the word Enron ring any bells?

Is it Up? Is it Down?

Shoot - I just read no less than ten different headlines reporting the news of the Manhattan real estate market - which way did it go? The New York Times today reported that sales are up - the number of transactions are down. Good grief.

This report came in today from Property Shark.

Key Takeaways from 2Q08 Manhattan Sales:

• Sales Transactions: The number of residential sales transactions declined by 38% compared to the same period in 2007, with re-sale transactions showing the largest decline.

• Median Sale Price: Median sale price rose 13% over the same quarter in 2007. Median price was down 2% for re-sale properties and up by 48% for new development units.

• Region of Manhattan: For re-sales, the uptown Manhattan market had the largest increase in median sale price compared to the same quarter last year. Among new development sales, the upper west side showed the greatest median sale price increase compared to 2Q07.


All I can tell you is that I think I'm the only one in Manhattan right now sitting at an office desk before this July 4th holiday.

Enjoy!

Darryl Strawberry told me he loved me

Does it count that I said I loved him first?

Honest - a New York moment.

It happened Friday as I was scampering into my office. 42nd Street between Mad and Park - and there he was standing in the doorway of one of our local stores. Smiling and looking very tall...with people looking very short next to him.

What is it about us that we can see someone who we've never met, but have followed their life through the media for so many years, and then simply shout, "I LOVE YOU"?

Of course I wanted to do a follow-up - "STAY OFF THE DRUGS" - but that thought of course only crossed my adled mind as I walked away...

Yes, a New York moment.

Housing Crisis is Over

OK - I said it today in our Sales Meeting. However, if you don't take my words for it, it just so happens that it's in today's Wall Street Journal, Page A23 - yep, the same words. http://online.wsj.com/article/SB121003604494869449.html?mod=djemITP
of course it's only an opinion.

As we've been watching the market nation-wide and the timing, we've essentially absorbed all the readjustments of all those 5 year ARMS that became due in the last four months. Either people were able to take advantage of the higher conforming loan amounts and excellent loan rates, sell, or they crashed. Manhattan - as normally happens - has been essentially immune to the vast changes seen across the country. Prices have adjusted. The badly constructed new developments will languish; the poorly designed floor plans will be passed over for another property better designed; better located; and in better condition.

We've been selling our exclusive listings within days. If the property is in great condition, and priced correctly, there are buyers wisely waiting the opportunity. Property is not being given away but it is definitely moving.

Spring Begins

There's an interesting feeling in our residential market these days. And what seems to be the problem? What I've observed is that the product in great shape and location goes almost as quickly as it hits the market. We still have buyers walking in and offering all cash.

And then we just encountered a buyer - HELLO FIRST TIME IN MANHATTAN - saying, "I think the market is going to come down so I will wait." Boy if I had a dollar for every time I've heard that statement since 2002...

But there are some facts to consider.

Our conforming loan limits have raised. But they are only good until the end of the year. The mortgage/loan rates are excellent. If you believe you are in a home too large, I say you should sell and downsize now. If you are in need of a larger home - the same is true. But you need to think about staying where you are for about five years.

Why listen to me? I've only been doing this business for 25 years...but don't just take my word for it. Here's Barbara Corcoran on the topic.
You will find this posted on MSNBC's website. http://www.msnbc.msn.com/id/23726652/


She states:

Waiting for prices to come down.

As smart as you think you are, you cannot sharpshoot the real estate market. You never know when the best time is. Prices ebb and flow, and occasionally, like right now, they go down a lot. Nobody knows when the tide will turn, and based on historic data it always inevitably does. The best you can do is buy within the low and we're definitely in the low right now.


You also need to keep the interest rates in mind. If you wait for prices to come down by 10%, and interest rates go up by a half a point, your monthly payments will be the same. (Emphasis added). Historically speaking this also makes now a good time to buy. The people I would advise not to buy right now are those who don’t plan to stay in their homes for very long. If, however, you are ready to make a long-term commitment, now is as good a time as any to buy a home.



So, here we are moving quickly into April with the chill still in the air. Have a blessed holiday.

YIKES

OK - here's the real question - who has not been hit with the flu? I think that February should just be declared flu month and no one bother traveling in any public transportation. Shoot I just got over a major hit that took me by surprise and knocked me out for an entire week. We are big washers-of-all-surfaces in our office and STILL....be careful out there.

So we have a changing market. This really is the year that if you were thinking of trading up or needing to refinance NOW's the time. The legislative changes only go through December 2008 so it's made to spur the market and everyone should take advantage of the higher loan amounts for conforming loans. Of course that takes in nearly all real estate in Manhattan but it's a great time for people to move either up, down, or refinance.

In case you ever wonder, I always practice what I preach! I'm doing both -- refinancing and purchasing.
I invite you to do the same.

May the Rates Be With You

Yes that is the force these days as we plunge into the beginning of the Spring season. Bank of America is bailing out Countrywide and JP Morgan Chase is riding to the rescue of many a loan faced with refinancing.

Indeed, the Fed will reduce rates - the bond market will rally and our mortgage/loan rates will dip lower. Please if you are looking for financing, do everything you can to get your credit rating as superb as you can. That is the key - always - but especially these days. There is product available.

The Crickets are Alive

Yes - there's renewed life in the real estate action here in Manhattan and I LOVE it especially as we enter the traditionally slow holiday time. I was beginning to think that even the crickets had died here in the office....though I spend way too much time here working. I am continually looking for great people to associate themselves with us here.

Thank you thank you thank you

There's never enough gratitude for all we have -- plain and simple. Thank you everyone for allowing us to do what we love.

As Fall Begins

Have you seen the new real estate section of the New York Daily News? I have to tell you I like it very much. None of the chi-chi-I'm-so-cool-it's-ridiculous type writing...it's actually insightful and enjoyable - ah a concept.
Of course they have Barbara Corcoran as their new columnist on Fridays but as far as her words of wisdom that I have read so far, I've heard it and read it all before. It's hard to be always new but this colume is in need of it. The show - where she communicates with a doll is not exactly thrilling to me either but maybe to others....you tell me.

What I wish to learn more about is how she came to be the marketing maven she is, and how to position your company to sell it. That's what she did well - better than anyone.



So have you seen REBNY's listing portal - minus most of the listings? That's all I can muster about that one.