Tags: CNS News | housing | crisis | economy

CNS News: US May Be on Verge of Another Housing Crisis

CNS News: US May Be on Verge of Another Housing Crisis
(AP)

By    |   Tuesday, 10 November 2015 06:32 AM

Fannie Mae and Freddie Mac, the two government-backed housing corporations bailed out seven years ago by federal taxpayers, reportedly may be headed for trouble again.

“Despite post-financial crisis pressure to reform, neither Fannie nor Freddie has done much to mitigate the risk to the American taxpayer inherent in government backing for these institutions,” CNS News reported, citing The Heritage Foundation.

“In fact, it appears that their equity (capital) cushion is dwindling even as portfolio obligations guaranteed by the federal taxpayer have increased in size totaling nearly $5 trillion,” CNS reported.

“Fannie and Freddie continue to advance the same types of “affordable housing” programs that fueled the last housing crisis. They’ve also added a new Housing Trust Fund aimed at so-called “underserved” geographic regions,” CNS reported.

“The vital lesson that policy leaders need to learn is that these government-backed corporations are not making failures in the U.S. housing and housing finance system any less likely,” CNS reported.

The Heritage Foundation isn’t the only prominent economic voice to sound the alarm about the housing industry.

Nobel laureate economist Robert Shiller of Yale University warns that the global economy continues to seek solid footing, and economic signs don’t look promising.

“We’re in a puzzling economy,” Shiller told Bloomberg TV. “This weak economy, it’s worldwide, and it might be a long-term malaise.”

He warns that home prices could tumble in the next few years despite a 5.1% increase in August.

“Well, I’m not surprised because we’re reporting the August numbers, it’s the end of the summer seasonal,” said Shiller. “If you look at seasonally adjusted [numbers], they’re just about flat, up one tenth of one percent for our 10 and 20 city index.”

“A year ago our Index was going up at a 10% rate, now it’s a five percent rate,” said Shiller.

“This is not the stock market, this is the housing market, and that suggests there might be a lowering, and possibly even declines in home prices in the next year or two.”

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Fannie Mae and Freddie Mac, the two government-backed housing corporations bailed out seven years ago by federal taxpayers, reportedly may be headed for trouble again.
CNS News, housing, crisis, economy
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2015-32-10
Tuesday, 10 November 2015 06:32 AM
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