Fannie and Freddie.

The programs offered through Fannie and Freddie did well over almost forty years and the total benefits far outweighed the collapse in the last decade. 
The President needs to step forward with his plan and not wait for the legislature to develop one. This has been a mistake throughout his presidency. He removes himself from a leadership position.
The two lending agencies should only be in business of insuring loans and not holding the actual asset. The ability to hold mortgages caused theses companies to play the dangerous game of betting on the movement of interest rates. When this game is played greed sets in and that is when mistakes are made.

In the nineties their reserve requirements were reduced and that was a mistake. When the programs are started again the underwriting standards need to be stronger than they were at the time of failing.  Prior to the collapse both organizations loosened their requirements too far.

Fannie and Freddie need to revert back to the FHA model and not be reconstituted as private entities with shareholders. The result of making both companies shareholder owned and listed on stock exchanges.caused the their leadership to take too much risk to increase the price of their stock and increase their personal bonuses that was tied to profitability. 

Apartments: Should You Refinance

Is it time, or past time, to refinance the loans on your apartment buildings? Using programs offered through HUD, you should be able to get a loan with the following terms.

Interest Rate:
3.9%
Term:
35-years
Personal Guarantees:
None
Loan-To-Value:
80%

Does it sound too good to be true? It might be and in order to make the right decision you need to hire a professional who has expertise in present value analysis. Below is some information on a potential refinance.

Click To Enlarge

Assuming the above facts and the loan balance of the existing debt is $831,155.10 with a 1% Prepayment penalty, a due date in 82 months, an existing interest rate of 7.45% and the owner plans to sell in 60 months, should he refinance?

Send me your email address or Tweet it and I will send you the answer on Friday, April 27th