Any macro numbers on mortgages?

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Any macro numbers on mortgages?

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2010 May 12, 12:15am 2,001 views 3 comments

With gov is backing 96% of mortgage then how much credit are they taking on each month? That is, what is the dollar magnitude of houses sold each month? It I guess $10B, then its not too big of a deal for the gov to eat them all. As is happening. It its $100B then we might have a problem.

How much more credit does the gov have? Can they underwrite $2T more of mortgages? $20T?

My hunch is the central bankers look at the national debt and realize it dwarfs all other business so they can just add another $1T or so here or there to manipulate any and all industries. What's another $1T in debt?

How much was printed to net-up Europe? Wasn't it like another $1T?

245,329 homes sold in prior 30 days (http://www.zillow.com/local-info/#metrimt%3D24%26dt%3D1%26tp%3D5%26rt%3D14%26r%3D102001%2C394913%2C394806%2C394463%26el%3D0)
Median sales (didn't see average): $192,300
Value: ~47B/month.

That's not big relative to the other bailouts. Gov can eat all mortgages. $500B is not going to bankrupt the gov and they are printing trillions and putting them elsewhere. Do you agree? Can the gov continue to write all mortgages? To otherwise manipulate other industries?

#housing

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SFace 2010 May 12, 1:34am

maxweber,

The problem is not underwriting mortgages, the problem is the morgages does not match the risk. Nobody pays attention to risk when assets and market go up, but risk is apparent when things turn the other way. The government (Fannie and Freddie) has been pricing their products way below a rate that is comparable to the risk.

I think between Fannie and Freddie they have lost about a 200B thus far and perhaps another 25-50B thru 2012. They are holding about 5T worth of loans. They can't undo the mortages written prior to 2009, but the goverment belives that mortgages written after 2008 are solid. This is the cost of the government's vision to promote home ownership. That's what they signed up for when Fannie and Freddie was created. I pay 770 a year in 1M 30 yr term life insurance, imagine if government wants to promote people to have life insurance and they offer me the same product but with a 500 a year premium instead, the government will lose their butt off in the long term as well. Loaning money in itself is not necessary bad, it just has to be measured against risk. Banks are in that business but the goverment is not (for the most part).

Loans written after 2008 non-FHA are probably overly conservative, (too much compensation for the risk). On the other hand, as long as the government is underpricing their FHA product, they will eventually take a loss. Whether the government can afford backing FHA mortgage is subjective, they can afford a nearly 1T military so another 10B or so (prospectively and account for good years and bad years) to back Fannie and Freddie is not that expensive from a higher level.