Jesse Jackson has long been in the business of extortion to collect money for his pet company “Rainbow/PUSH Coalition”. His normal mode of operation is to threaten companies with organized boycotts against the company’s products/services until the company makes a substantial “contribution” to Rainbow/PUSH.

This is extortion, and I believe Jesse Jackson is a criminal. He has single handedly done more to hurt race relations in this country than any other person.

But today’s news is not just about Jesse Jackson. It’s about his willingness to accept money from both Fannie Mae and Freddie Mac during the HEIGHT …..click here to read more

Before I begin, allow me to reiterate that I’m fully aware this is a real estate blog and that many of the thousands of readers who visit these pages every day never, ever think about the stock market or the broader economy and its impact on your real estate investment profits.

But some events deserve special attention, and one of those happened today. Fannie Mae, the largest mortgage company in the United States, announced a loss in the second quarter of this year that was nearly three times larger than expected.

It’s a very common experience to hear about companies reporting their profits and losses each quarter. So why is this announcement different or more significant than most?

It’s all in the way the stock market reacts to it. Recall that earlier this week, I said that if the stock market was able to ignore a bad announcement from Fannie Mae, that is a solid sign that “smart money” (meaning mega money managers) think the worst is over for the credit crisis, and that the bad news has already been factored in to the stock market.

So what’s happening in the stock market? As of this moment at 10:38 AM, the Dow Jones Industrial Average is up by about 180 points, or 1.5%. That’s a pretty huge response. But the important thing to remember is that just about 3 weeks ago, this same stock market fell apart hard at the news of the potential impending collapse of Fannie Mae and Freddie Mac. So if the stock market closes today with anything other than a big sell-off, that’s a very positive sign.

Now that there is some hard data out about exactly what’s happening, there seems to be a collective acceptance that’s calmed the stock market.

By extension, the significance of the muted reaction to massive losses at Fannie Mae is that there’s one more bit of evidence that some people “in the know” think that the housing market downturn has run out of steam. And when one factors in the emergence of several Distressed Debt Funds, there is significant evidence of Wall Street’s expectations for a slowing (and possible reversal) of the real estate market doldrums.

Now that you know how Fannie & Freddie’s earnings results currently correlate to the perceived condition of the real estate market, I advise you to go out and find some good investment property to purchase. It won’t be long and you’ll be very glad you did so!

Thank you for reading FreeRealEstateTraining.com!

Teaser Video - Bryan Ellis on Fannie Mae’s Earnings Disappointment

What happens when a major lender wants to unload hundreds of millions - or even billions - of dollars worth of delinquent mortgages, even at a price lower than the amount of money they are actually owed?

When that type of transaction is done with individual properties, it’s called a short sale. When it’s done with billion-dollar portfolios containing thousands of separate mortgages, it becomes the mega-money version of a short sale called “distressed debt funds”…

…and the formation of new investment funds for purchasing distressed debt suggests that the worst of the credit crisis is behind us, particularly when those investment funds are backed by major money managers like PIMCO, BlackRock and Third Avenue Value Management. Here’s why this is such a good sign:

When any market (real estate, in this case) faces a sharp and severe decline, the financial players in that market go into “shock mode”. As an example, see what’s going on right now at Fannie Mae, Freddie Mac, Countrywide, etc. And when this happens, those types of companies tend to be willing to sell off their underperforming (delinquent) assets at lower than face value in exchange for an immediate end to the “bleeding”.

That’s where the big-time money management firms I mentioned before come into the picture. Like vultures, they are flying high above the scene and watching as the major mortgage lenders are bleeding uncontrollably and are increasingly willing to do ANYTHING to lessen the pain…

…and sometimes that includes actions like selling BILLION-DOLLAR mortgage portfolios for far less than the face value of the securities.

As a practical example, imagine that some mortgage company holds a billion dollars in mortgages, and most of them are in or approaching foreclosure. You come along and offer this company $500 million to take the portfolio off of their hands. This mortgage company isn’t happy to “lose” $500 million on this deal, but as far as they know, the value of their portfolio could decline even further and be even less than what you’re offering.

So they sell the portfolio to you. Why is this a good deal for you? It’s simple, really. The math favors you. You’ve been watching the market carnage and you’ve been able to evaluate things rationally - and that’s a luxury that the mortgage company you just “scalped” hasn’t had.

Why would you make such an investment in “bad” debt? The only reason you’d do so is that there is a LOT of evidence that the bloodletting in the market is at or near the end, and you’re willing to risk your own money on the notion that your mortgage portfolio that has a “face value” of one BILLION dollars and for which you paid $500,000,000 will soon be shown to be worth something between those two. And when that happens, you make money. And probably a whole lot of it.

That’s exactly what’s going on right now. Distressed Debt Funds tend to spring up in the aftermath of market downturns, and are a very good sign that insiders watch for to determine when “smart money” is re-entering a market.

What is one of the signs that a turn in the real estate market is happening? Here’s one: The National Association Of Realtors announced that pending home sales were significantly higher than expected in June. A very positive sign indeed.

The time is now. Don’t let this opportunity pass you by!

Thanks for reading FreeRealEstateTraining.com.

This morning, Freddie Mac announced their earnings - or more correctly, their losses - for the second quarter of this year. It was bad - the losses were about triple what market analysts were expecting.

What’s interesting is the resulting action - or lack thereof - in the stock market. While Freddie Mac’s shares have fallen hard again (down another 15% or so as of this writing), the interesting thing is the muted impact this is having on the stock market as a whole.

Right now, the Dow Jones Industrial Average is down about 50 points, which is less than one half of one percent. This is curious and encouraging, because in recent weeks, bad news about Fannie or Freddie have caused far more severe sell-offs.

There are many things this can mean, but I suspect one of the meanings is that the stock market as a whole has already factored in the mess created by the Fannie/Freddie fiasco. And because of this, additional negative announcements from those companies are likely to be met with a yawn.

Note that my comments are based partly on analysis, and partly on gut feeling. I may be entirely wrong, and we’ll soon find out because Fannie Mae announces their earnings this coming Friday, and if that announcement causes a huge sell-off, I will have been proven wrong.

But if Fannie Mae makes a negative announcement and the stock market does not react negatively, that is a clear sign that “smart money” believes that the worst of the bad news about the credit crisis has been factored in - and that may even signal a buying opportunity for mortgage lenders, home improvement companies and maybe even home builders.

Additionally, mortgage applications were up last week as interest rates fell.  That’s a small indicator, but still a positive one.

Furthermore, have you taken a look at the real estate futures market? Right now, it’s possible to go long or short on any of the markets covered by the Case-Schiller Index using a futures contract rather than actually buying real estate. I’ve been watching this market for a couple of years waiting for it to be sufficiently mature, and it’s becoming really interesting. More on this soon.

As always, your comments, criticisms and thoughts are welcomed here on FreeRealEstateTraining.com!

Wow.  Jerry Bowyer of Benchmark Financial Network has placed the Fannie Mae debacle in a context and clarity that I could only dream of.

Here’s what he has to say about it:

Feds Nearly Murdered Fannie

I don’t know much about Mr. Bowyer, but I think I could become a fan.

Thanks for reading FreeRealEstateTraining.com!