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[0:00] ..." This is Anthony -- in the double BBC newsroom mortgage rates are falling quickly now that the federal government has decided to bail out the biggest mortgage companies in the country. Fannie Mae and Freddie Mac. The moved to go with the companies is aimed at stabilizing the housing market because of the flood of foreclosures vacant homes for sale and rising unemployment. I spoke with the group publisher of the Warren"...
[1:42] ..." Now Fannie Mae and Freddie Mac underwrite what about 70% of all the outstanding mortgages in this country."...
[3:07] ..." because so much of it depends on what happens to the overall housing market. But. What I'm worried about is the plan. Calls for. Fannie and Freddie to grow their investments. To make more mortgage money"...
[4:38] ..." and want a fair return. And fair return for investors means higher mortgage rates. For everyone else. Absolutely. It is going to be more expensive. To take out a mortgage. After the next eighteen months or"...
[5:59] ..." end of this year that means the federal government. Believes that this housing market is still getting much worse as -- state works for quite awhile."...
[0:00]" This is Anthony -- in the double BBC newsroom mortgage rates are falling quickly now that the federal government has decided to bail out the biggest mortgage companies in the country. Fannie Mae and Freddie Mac. The moved to go with the companies is aimed at stabilizing the housing market because of the flood of foreclosures vacant homes for sale and rising unemployment. I spoke with the group publisher of the Warren group Vinson bill -- about the tickle for a pretty and --"
[0:26]" The government got special powers earlier this year in July. To oversee both of these organizations Fannie and -- For many years these have been -- quasi public agency they were set up by congress. And it was an assumption that the US government was standing behind them even though the US government never explicitly said. We are standing behind these. -- some organizations. Ask this mortgage market worsened investors. Wanted to see some kind of absolute guarantees. That the government was going to back these organizations. And when the government looked into they said. We we either have to be in total control of this we have to be running these organizations. Or we have to be completely out. And they realize that it could not be completely out. That the too big mortgage buyers were in such bad shape. Or world likely to be in such bad shape and that's a big part of this they're looking forward to seeing big losses coming. That -- said. We can't. Pull out of this -- if we don't back these. Investors are going to run away. The entire mortgage market is applicant collapsed we've got to take these over we got stabilizes market."
[1:42]" Now Fannie Mae and Freddie Mac underwrite what about 70% of all the outstanding mortgages in this country."
[1:48]" Yeah they they. Body. Between 72. In some areas 80% of all mortgages. Especially now because all of this collapse that's been going on in the market means that there are no private buyers out there. Buying these mortgages. Without Fannie and Friday we would not be able. To buy -- house because mortgage money just wouldn't be available."
[2:15]" Is this a statement that the the programs over the past. Decade or more to allow people to own their own homes basically its been a failure."
[2:25]" Absolutely I think we're seeing here is the is the dramatic collapse. Of the -- great experiment to get everybody into a home. Not everyone can afford a home we can't. Just magically finance everybody into home. And that's what we're trying to do optically over the last 45 years. It's not going to work. We're having foreclosures like crazy coming up on us and it some -- really desperate situation."
[2:55]" Is there any way to even guess how much this will cost the taxpayer to. In eventually below these conflicts."
[3:03]" It's it's up. It unknowable at the moment because so much of it depends on what happens to the overall housing market. But. What I'm worried about is the plan. Calls for. Fannie and Freddie to grow their investments. To make more mortgage money available now and -- pretty much the end of 2009. After that. It calls for them to start we scaling back 10% a year every year. The assumption there is that by the end of next year. The market will completely change and private investors will be stepping back up. If that assumption is wrong. We run this huge risks. Completely decimated in the market again and perhaps even chances starting. To get back on its feet. So I think the issues both for the taxpayers. Union for everyone who's looking at buying now. Are very --"
[4:09]" So looking forward we really don't know how this scenario is going to play out it really depends on. More traditional investment markets stepping up the -- and buying these mortgages."
[4:19]" Absolutely well we need to see are. The two large investment banks and large the pension funds. This site and get back into the market and buying mortgages. But they're very skittish about doing that they all pulled back and when they do come back into the market. They're going to come back again and want a fair return. And fair return for investors means higher mortgage rates. For everyone else. Absolutely. It is going to be more expensive. To take out a mortgage. After the next eighteen months or so than it is now."
[4:56]" of the jury is still out obviously this is a very complicated issue that it took years to get into. Why did it take so long for the federal government to get involved when we saw this unraveling over the past couple of years."
[5:09]" Well you'd have to realize that we say unraveling. Sort of like finding a read on your sleeve. And pulling a little bit you think you've just got -- base you know one thread the loose. And sometime later you find out that you basically -- on the entire scene. It didn't look this bad to begin with. We are in an escalating. Market of calamity. And it's. Something that as the federal government looked. And said. Regardless of where these organizations stand today we think this is going to get much worse. And that's that is actually they've done they've looked ahead and said we think that they can meet their obligations to date. We don't believe they're going to be able to meet their obligations. By the end of this year that means the federal government. Believes that this housing market is still getting much worse as -- state works for quite awhile."
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