Fannie Mae

GSE's (Government Sponsored Entities) like Fannie Mae would be bankrupt and long gone like Lehman and Bear Stearns today if not for explicit government and Federal Reserve facilitated write downs of their bad assets in the secondary mortgage markets (e.g. securities and derivatives). In their quarterly report last month, Fannie reported that they've transferred thus far over $1.5 trillion in bad mortgage securities to the Federal Reserve's balance sheet, in a loss sharing agreement they came up with after Fannie was put into government conservatorship last year. These are off balance sheet items--their reported losses, after considering operating costs, is a relatively paltry $19 billion. Turns out that Fannie (and Freddie's) lending policies during the boom years were very relaxed, and in fact, they bought up a lot of NINJA loans (acronym for No job, No Income, No Assets) and repackaged them into securities. It's a blatant example of short term thinking and cheap political compro... Read more

If you have commercial or multifamily property that has low leverage, good management, solid numbers, and want a great loan with non recourse, a Fannie program is best. This quasi government corporation exists to facilitate solid real estate financing needs.