Housing pinch?
Freddie Mac, the mortgage company, may need a "substantial" capital injection to move past its accounting problems after a multi-billion dollar restatement of earnings. Basically, the company, which packages Federally backed mortgages into financial portfolios (which is not to say that the Feds back Freddie Mac), has a lot less money than we thought and, therefore, a lot less financial flexibility, which could reduce liquidity in the mortgage industry. Here is the full report.
As I've written before, this is the kind of prick that could take the steam out of the housing market. If people see the value of their homes stop rising, they'll be less inclined to borrow, which is all that keeps the economy growing at this point.
Posted by Mitch Ratcliffe at July 24, 2003 09:21 AM | TrackBack