Facts That Make A Difference
1. LACK OF TENANTS - The national vacancy rate for apartments is 7.5%, its highest level since 1987 (source: Bloomberg).
2. LOW - 11 interest-rate forecasters surveyed in late December 2008 predicted that the yield on the 10-year Treasury note would be 46% as of 6/30/09. The actual yield on the 10-year Treasury note was 3.54% as of 6/30/09. At the time the predictions were made, the yield on the 10-year note was 2.10% (source: Barron’s).
3. IN THE WRONG PLACE AT THE WRONG TIME - 40% of homes being foreclosed upon today by lenders are not owner-occupied, i.e., the foreclosed homes are occupied by renters (source: Seattle Times).
4. WHAT? - One year ago tomorrow (7/14/08), Barney Frank, the chairman of the House Financial Services committee stated “Freddie Mac and Fannie Mae are fundamentally sound. I think they are in good shape going forward” (source: Business Week).
5. FANNIE AND FREDDIE – US Treasury Secretary Hank Paulson announced a plan on Sunday 9/07/08 where the government would take control of mortgage giants Fannie Mae and Freddie Mac. The Treasury Department acquired $1 billion of preferred stock in each company, warrants for 80% of their common stock and pledged up to $200 billion of financial support as a result of potential mortgage defaults. The initial $200 billion pledge by the government has since been doubled to $400 billion (source: Wall Street Journal).
2. LOW - 11 interest-rate forecasters surveyed in late December 2008 predicted that the yield on the 10-year Treasury note would be 46% as of 6/30/09. The actual yield on the 10-year Treasury note was 3.54% as of 6/30/09. At the time the predictions were made, the yield on the 10-year note was 2.10% (source: Barron’s).
3. IN THE WRONG PLACE AT THE WRONG TIME - 40% of homes being foreclosed upon today by lenders are not owner-occupied, i.e., the foreclosed homes are occupied by renters (source: Seattle Times).
4. WHAT? - One year ago tomorrow (7/14/08), Barney Frank, the chairman of the House Financial Services committee stated “Freddie Mac and Fannie Mae are fundamentally sound. I think they are in good shape going forward” (source: Business Week).
5. FANNIE AND FREDDIE – US Treasury Secretary Hank Paulson announced a plan on Sunday 9/07/08 where the government would take control of mortgage giants Fannie Mae and Freddie Mac. The Treasury Department acquired $1 billion of preferred stock in each company, warrants for 80% of their common stock and pledged up to $200 billion of financial support as a result of potential mortgage defaults. The initial $200 billion pledge by the government has since been doubled to $400 billion (source: Wall Street Journal).
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