Freddie Mac and Fannie Mae Delisted!

A topic that seems to have flown under the radar; government home mortgage giants Freddie Mac and Fannie Mae were delisting from the New York Stock Exchange. Actually they are Government Sponsored Enterprises (GSE’s).  Even with $145 billion in taxpayer money spent to prop them up, shares have dropped so significantly they no longer qualify for inclusion on the exchange but will continue to be traded via the infamous bulletin board instead. In order to participate in the traditional exchange, shares must trade above $1...Fannie has been below that level for well over a month making delisting a legal necessity. Freddie has continued to struggle at just over the $1 level but will also be delisted given the eventual prospects. Given the difficulty of becoming profitable...much less an actual attempt to repay the government aid, it's unlikely any serious effort to revive the failing entities will happen.

Since January, Freddie and Fannie (with some help from the Veterans Administration) have underwritten nearly all new home mortgages; throw in the assumption of bad assets and bail-outs and the combined total for the defunct duo now accounts for nearly half of all the mortgages in the entire nation. With bank lending standards showing little sign of relief, experts are wondering what the delisting of Fannie and Freddie may mean for the future of a struggling real estate industry.

Aside from the loss of shareholder value...which is expected to be significant as neither entity has retained any level of significant value...the immediate impact is expected to be minimal. "Business as usual" is the anticipated motto for the time being. However, experts predict the long term consequences could dramatically alter the landscape of mortgage lending for years to come. There is significant support for privatizing the role of Freddie and Fannie while liquidating assets to recoup some of the anticipated $1 Trillion in losses currently shouldered by the tax payers.