Like every other third party mortgage investor on the planet, Fannie Mae has had a rough time lately. When Wall Street finally stopped buying sub-prime loans Fannie Mae found themselves holding millions of un-sellable mortgages…essentially holding the bag.
Was it greed that created this situation?
That is too easy of an answer. The truth is the system was set up for people who are responsible for the increase in the value of a company, to keep up with their investors desires for ever growing profits as compared to their competition.
In other words, they have to keep up with the “Jones’” or their companies will lose share value, their investors (you and me) will lose their investment in the company and the executives will lose their jobs fir not satisfying the company mandate of growth or shareholder value.
Essentially, Fannie Mae business decisions were made driven by a purely profit motive.
Fannie Mae Foreclosures: The Perfect Storm
The CEO of Fannie Mae had to keep up with the CEO’s of Freddie Mac and all the other smaller mortgage investors or the world would have stopped working in their view. It was either “grow profits at all costs” or they believed they would have died long ago and the situation would have become worse than “Not Working” …it would have been broken.
Was the environment created political?
Yes and no.
Many believe that if the political climate for these sub-prime loans had not been created, the past market conditions would not have happened. Without the politics, millions of homeowners would still be renters not homeowners. This is somewhat simplistic, the problem is really more of a combination of corollary events that when assembled in a particular order created a “Perfect Storm” of Greed and Fear among Lenders, Homeowners and Mortgage Professionals.
This “Perfect Storm” is why Fannie Mae has been forced to foreclose on so many houses in the past two years. Currently Fannie Mae has more foreclosures on the negative side of their books than ever before….the wake of the storm so to speak.
The same perfect storm has caused Fannie Mae stocks to sink like a stone, with millions of foreclosures and people losing their homes in record numbers compounded by job cuts throughout the financial and housing industries, this rippling effect will be felt for years to come by Fannie Mae.
These are not the signs of greed or political mistakes. These are the outcroppings of a fatal combination of Greed and Fear.
This same combination of raw human emotions have been seen throughout history and are not relegated to the financial industry, big business, politics or the times we live in.
Foreclosure Properties: An Excellent Investment Opportunity
Remember when it was cool to be a Dotcommer? Before that bust there was oil, tulips and several others. Real Estate in the early 90’s saw the same type of collapse in Britain. As a result, the British Government put in safety measurements to stave off another housing implosion but the measures couldn’t stand up against the Fear and Greed that often motivates human behavior.
We have all felt the effects of the housing downturn and the money we have all lost in the stock market, our 401k’s, and the reduced equity in our homes.
The best way to counter these negative financial effects is to buy the foreclosures offered by Fannie Mae.
These assets have depressed pricing and offer a great profit opportunity for homebuyers.
For the right buyer, foreclosures are an excellent opportunity to buy a house at a lower than market-value price.
My advice? Make an offer, buy a foreclosure home and enjoy the ride of the next decade of appreciation.