Mortgage loans are in the news today as two of the largest mortgage companies in the United States, Fannie Mae and Freddie Mac, lost nearly half of their stock value during the week of July 11, 2008. They own over one half of all the mortgages in the United States, with a total value of $5.2 trillion dollars. They have posted $11 billion in losses.
For the average Joe, those numbers are barely imaginable. But wait…let’s see what $5.2 trillion looks like…$5,200,000,000,000.00. So if they’ve lost $11,000,000,000.00 what is left? Try $5,189,000,000,000.00.
So what percentage of their assets did they lose? I believe that would be .002. Please correct me if I’m wrong. To relate that to everyday living, if your monthly take home pay was $3,000 and you lost .002 percent of that, how much would that be? $6.00.
Is that why Senate Banking Committee chair Christopher Dodd (D-Conn.) called the mortgage giants sound, saying they are being unfairly punished by Wall Street?
Mortgage loans are probably the single largest purchase you will make in your lifetime so it makes sense that a lot of people are doing searches for the term “mortgage loans.” In fact, according to one reliable keyword tool on the Internet, there are 637,449 daily searches for just the word mortgage. That same keyword tool tells us that all of the advertising dollars spent on just the word mortgage during one month total $4,603,982.63! Google is making money from the mere word “mortgage“!
The bottom line is that people with risky (sub-prime) loans are defaulting on their mortgages causing nationwide economic worries. This may impact the rest of us, making it difficult for us to buy or sell our homes. Seems that the best advice is to avoid getting another mortgage loan and keep our own mortgages current.