Fannie Mae

The two biggest sources of mortgages for American homebuyers plan to raise their base fees to counter what they see as continuing "adverse conditions" in the real estate marketplace. At the same time, however, Fannie Mae and Freddie Mac - who currently fund more than three-quarters of all new home loans - also plan to selectively reduce fees for certain applicants whose likelihood of default and foreclosure appear to be lower than the companies' previous estimates. The changes are being driven by what's known as risk-based pricing.

For anyone looking to buy or sell a home, last month was more of the same: Average sales prices in the Baltimore metro area continued to drop as the number of houses changing hands plummeted. The average price in the area - Baltimore City and the counties of Anne Arundel, Baltimore, Carroll, Harford and Howard - was just under $320,000. That's down 3 percent from a year earlier, according to numbers released yesterday by Metropolitan Regional Information Systems Inc. It's also below the average two years earlier.

Are things really that bad? Is this the worst situation we've faced since the Great Depression? Is there any way out? Those questions must be asked thousands of times a day in private and public conversations about the financial system and the economy. The Internet is filled with often bitter commentaries insisting that this time America has dug a hole from which there's no escape. That kind of talk is always out there, but it is becoming increasingly pervasive. It's also understandable given what the nation has suffered through in the past year: tumbling home prices, soaring mortgage defaults, the worst stock market decline since 2000-2002 and record oil prices.

Sweeping legislation that offers help for every group battered by the mortgage foreclosure crisis will be voted on in coming days. The bill also includes something for almost everyone to hate. But Congress and President Bush should act quickly to make it law because it should give the nation some needed reassurance and the tools to help stabilize home values. The legislation promises a steady flow of affordable money to encourage banks to offer new mortgages, which are essential to any recovery.

WASHINGTON - The House approved a sweeping plan yesterday that responds to the most serious housing crisis since the Depression by providing a federal backstop for struggling mortgage giants Fannie Mae and Freddie Mac and aid to homeowners facing foreclosure. In a sign of election-year anxiety over the economy, the White House, in a turnabout, dropped its veto threat and signaled that President Bush would sign the measure, even though it includes a provision he opposed to provide $4 billion for communities to buy and fix up abandoned properties.

Edward in Brockton, Mass., got scared enough by the news headlines a week ago that he did the unthinkable. He read the paperwork for his money-market mutual fund. What he found there made him more nervous, because the fund included a lot of paper from Freddie Mac and Fannie Mae. By the time he called my radio show to ask about dumping the fund, the U.S. Treasury's plan to boost confidence in the two mortgage giants was out and some of the worry was mitigated. But Edward still couldn't shake the feeling that maybe he ought to do something to keep his most conservative holdings completely safe.

Congressional action to assist mortgage giants Fannie Mae and Freddie Mac, and the failure of California bank IndyMac, gave bloggers plenty of targets this week. A sampling of the commentary: Q.: What's your diagnosis of what happened to Fannie Mae and Freddie Mac? A.: First of all, they had too little capital to withstand adverse circumstances. And the adverse circumstances were the severe downturn in housing, the decline in house prices, and the rising default rate on mortgages. I don't know of anyone who early enough was saying that there would be a major national decline in house prices, so I can't hold them to that standard, but I can hold them to a standard of holding adequate capital to be able to withstand unforeseen circumstances.

The Securities and Exchange Commission is adopting a temporary rule that will limit the ability of traders to bet on a drop in the shares of brokerage firms, Freddie Mac and Fannie Mae, the agency's chairman, Christopher Cox, told the Senate Banking Committee yesterday. The SEC will require traders to hold shares of the two mortgage buyers and the brokerages before they execute a short sale. The emergency order, to be in effect for 30 days, will bar a practice called naked short-selling, in which traders avoid the financial cost of borrowing shares - the way short-selling ordinarily is done - when betting that the share prices will fall.

WASHINGTON - A sense of economic gloom gripped Washington yesterday as President Bush urged Americans not to lose faith, Ben S. Bernanke, the Federal Reserve chairman, offered a mostly bleak assessment of the many difficulties ahead for the economy, and the administration's latest effort to help the housing sector faced tough questioning in Congress. Despite widespread concern about losses at Fannie Mae and Freddie Mac, the two giant housing finance companies, the Bush administration's call for quick passage of legislation to authorize the use of government funds to save them ran into heavy fire, especially among some Republicans concerned about taxpayer liability.

As the Bush administration moved to rescue the nation's largest two mortgage companies, confidence in the banking sector spiraled downward yesterday. In Southern California, lines snaked around branches of IndyMac Bancorp, the large lender seized by federal regulators Friday, while customers hurried to withdraw their money. As the anxiety spread through the financial markets, two other big banks, one in Ohio and another in Washington state, felt compelled to assert that they were sound.