| Loss Mitigation General Chat loss mitigation |
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10-02-2008, 02:56 PM
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What is the reason Fanny Mae and Freddy Mac...
...and Wachovia bank & other banks to be either bankrupt or bought ou? I also know that there are a few large banks buying out the smaller banks-why is this and the Fannie and Freddy bankruptcy happening?How does the government buy out their debts and how does this affect us and the economy?What's causing all of this "economic collapse?"
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10-02-2008, 04:12 PM
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Freddy and Fannie are "guarrenteed" by the Government. In 1999 Pres. Clinton and the Democrats in Congress pass a bill called the Affordable Housing bill. basically it said that banks could no longer deny a home loan mortage to low income people based on their ability to pay the loan back. Because of this there are a lot of people now foreclosing on their loans because they bit off more than they could handle. So now other banks can't may new loans because they have too many loans that are in foreclosure and other banks don't want to buy the "bad" loans so the banks can't borrow from each other. If a bank can't sell a loan they have onteh books they have to decrease their "reported value" that they are worth- this is the acconting term "mark to market" and if their "worth" dropps to a certian point they are bankrupt.
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