Fan/Fred: Don't Ask, Don't Tell?

A perfect storm is coming in the housing market. Millions of mortgages are in default or foreclosure, mortgage rates are firming and mortgage issuers are significantly raising both borrower requirements and fees. The Federal Reserve, which has been propping up the housing market by buying mortgage-backed securities, says it plans to stop buying at the end of March. The $8000 first-time and $6500 homebuyer tax credits are scheduled to end for mortgages that close after June. Meanwhile stocks are up and economists talk about the recession being technically over, which might be true, but for how long?

We're in big trouble and, so far at least, nobody seems to have a plan.

And then there's the mystery of Fannie Mae and Freddie Mac, those Government Sponsored Entities that House Finance Committee chairman Barney Frank says have effectively become policy tools of the federal government and ought to be reorganized to reflect that. Yet, in the Fiscal Year 2011 federal budget released this morning there is no sign of Fannie and Freddie's combined $7.2 trillion total corporate debt and mortgage obligations.

"What the Hell is going on? " I asked my friend Jack, the world's smartest mortgage banker.