Fannie Mae and Freddie Mac could return to making profit

Fannie Mae and Freddie Mac are starting to creep towards being solvent again. The government had to take control of the 2 troubled firms in 2008, and has lent both houses collectively more than $130 billion. However, dark clouds are on the horizon. The government intentions to possibly do away with the two government sponsored enterprises and a fresh round of foreclosures is on the horizon.

Loans given to keep Fannie and Freddie in business

A lot of bailout money went to Freddie Mac and Fannie Mae. They were able to continue business this way. Both home loan houses received a combined sum in excess of $130 billion to keep the real estate industry afloat. Right now, less money is being lost by the two corporations. ABC reports that this is a good sign. Only $2.1 billion was lost by Fannie Mae and $1.7 billion lost by Freddie Max in the last quarter of 2010. A $16.3 billion loss from Fannie and $7.8 billion loss from Freddie was reported in this very same time of 2009. Fannie has asked for $2.6 billion and Freddie has asked for $500 million in loans, even with these losses decreasing.

Stopping the mortgage giants from ruling

For decades, Freddie Mac and Fannie Mae have played a crucial role in the real estate industry. The 2 businesses purchase home loans and resell them as investments in order to free up capital for loan companies to lend more home loans. The government is intending to find ways to get Fannie and Freddie out of the mortgage sector. Just reducing involvement might help a lot. Treasury Secretary Timothy Geithner has admonished Congress to have a significant plan ready before trying to vote on anything, in accordance with USA Today. Geithner cautioned House Republicans eager to cut the programs that doing so could have an adverse effect on the real estate industry, including possibly destabilizing the housing finance industry entirely. Geithner has recommended a gradual program as the best course.

Not getting better yet

It is anticipated that Freddie and Fannie will not get much better. They are expected to get hurt even more soon. Until "robo-signing" cases are solved, several foreclosures can't be completed while about 50 percent of mortgages in the United States are owned by Fannie and Freddie while 90 percent were created in the last few years. In the next few years, Treasury Secretary Geithner thinks that housing prices will go up in the next few years, no matter what occurs with Freddie and Fannie, Reuters states. He also recommended that given housing conditions over the past few years, home buyers put larger amounts of cash down to ensure greater stability.

Information from

ABC News

abcnews.go.com/Business/wireStory?id=12995329&page=1

USA Today

usatoday.com/money/economy/housing/2011-03-01-fannie-freddie-geithner_N.htm

Reuters

reuters.com/article/2011/03/01/us-usa-housing-geithner-idUSTRE72000P20110301?pageNumber=1