Commercial investors are watching the fall out of the Fannie and Freddie crises as much as anyone, since they have been a source of the limited capital available these days.

SOURCE: Bloomberg

Fannie Mae rose for a sixth day in New York trading, the longest streak since May 2007, after Chief Executive Officer Daniel Mudd replaced three top deputies in an effort to restore investor confidence.

Fannie and Freddie have reported $14.9 billion in net losses for the past four quarters as loan delinquencies rose.

Fannie and Freddie, created to boost homeownership, own or guarantee at least 42 percent of the $12 trillion in U.S. residential-mortgage debt outstanding. They also provide much needed capital to the commercial mortgage industry.

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SOURCE: Bloomberg

Investors are watching today's news with some understandable concern, given that Fannie Mae and Freddie Mac combined hold the lion's share of the mortgage paper in the US today...

Fannie Mae and Freddie Mac tumbled in New York trading to their lowest levels in more than 17 years on concern the government will be forced to bail out the mortgage finance companies, wiping out common stockholders.

Fannie slid 22 percent, while Freddie dropped 25 percent after Barron's reported that the Bush administration is anticipating the government-chartered companies will fail to raise the equity they need to offset credit losses, prompting the U.S. Treasury to act. The companies' stock market values are well below the minimum of $10 billion in capital that each would need to raise to ``have any credibility,'' Barron's said in its story.

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SOURCE: Forbes

The news this week is heating up and may turn out to be a watershed moment for the financing industry...

Bailout rumors have Fannie and Freddie shareholders worried that those stocks are in a race to zero.

On Monday, Fannie Mae and Freddie Mac plunged off a weekend report that posited that the government will indeed need to rescue the cash-starved firms and that equity holders will end up losing their shirts.

Fannie fell 17.8%, or $1.41, to $6.50 and Freddie lost 16.6%, or 97 cents, to $4.88. Investors don't have much left to lose; both companies have lost more than 90.0% of their market value in the last year.

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SOURCE: Bloomberg

As the financial pressures increase, Bernanke is being put on the hot seat to make some pivotal decisions soon...

Ben S. Bernanke is still trying to define which financial institutions it's safe to let fail. The longer it takes him to decide, the tougher the decision becomes.

In the year since credit markets seized up, the 54-year- old Federal Reserve chairman has repeatedly expanded the central bank's protective role, turning its balance sheet into a parking lot for Wall Street's hard-to-finance bonds and offering loans through its discount window to investment banks and mortgage firms Fannie Mae and Freddie Mac.

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SOURCE: Globe Street

Just when we thought there was something positive happening in the REITs market B...

After recently giving multifamily REITs a marketweight rating, analysts at Banc of America Securities have downgraded the sector to underweight. The reason, according to locally based BofA analyst Dustin Pizzo, is that current valuations are no longer taking into account the potential pitfalls, so there is a chance apartment REITs may give back the tremendous gains they’ve enjoyed so far this year.

On the investment front, deals could continue to lag as sales volume declines and financing becomes less available and buyers opt to utilize debt assumptions and seller financing. "Over the next 12 months we believe asking prices will increasingly begin to reflect the new capitalization structure, increasing financing costs and pricing," says Pizzo. And with stock cap rates on the rise, any operating weakness or deterioration in financing will have a negative impact.

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SOURCE: Wall Street Journal

At least there are some signs of possible relief in the capital markets ahead...

Real-estate stocks have mounted a comeback so far this quarter, as Wall Street's worries over their ability to access the capital markets have eased.

The Dow Jones Equity All REIT Index has posted a 3.5% gain in total return between the end of the second quarter on June 30 and Tuesday's close, surpassing a 1% gain by the S&P 500-stock index and a 2.9% advance by the Dow Jones Industrial Average. The increase for stocks of real-estate investment trusts has -- at least for the first half of this quarter -- offset some of the index's second-quarter decline of 4.9%.

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"As the housing market tries to land on the runway, there's going to be a few hard bounces," said Brian Bethune, an economist at Global Insight Inc. in Lexington, Massachusetts. "Maybe you could think of this as a bounce up... Affordability has improved. We're starting to move toward a bottom."

SOURCE: Bloomberg

U.S. pending sales of previously owned homes unexpectedly rose in June as buyers swept up foreclosed and lower-priced properties.

The index of pending home resales rose 5.3 percent after a revised 4.9 percent decline in May, the National Association of Realtors said today in Washington. Other reports showed claims for jobless benefits jumped last week to a six-year high and consumer borrowing surged in June.

The most foreclosures on record have forced property values down enough to stir interest among buyers, helping to stabilize the market. Still, repossessions may keep mounting as stricter lending rules make it harder for owners to refinance their mortgages, economists said.

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