possibly so we didn't have to lose the house. >> reporter: he spent two years trying to work with fannie maemodify his $80,000 mortgage, but fanny wouldn't budge. he was evicted last month. >> my wife and i, we were going to live here, you know, i'd say forever but... until we die. this was going to be the first and the last house, but it didn't happen that way. >> reporter: ignacio is working again. he says had fannie been flexible, he'd still be in the house and fannie would not be facing a loss. >> i never even dream about that i was going to lose the house this way. >> reporter: it's one of nearly 136,000 homes fannie mae will have to unload. elaine quijano, cbs news, cleveland, ohio. >> pelley: we're not taking our eye off the hurricane. back with an update in a moment. moment. from my worst allergy symptoms. so lily and i are back on the road again. with zyrtec® i can love the air®. jjtoi switched to a complete0, multivitamin with more. so lily and i are back on the road again. only one a day women's 50+ advantage has ginkgo for memory and concentration, plus support for bone and breas

to move it away from fannie mae? >> there is no reason why the gse's can start working to set up these markets. there is the reason they cannot set up a credit default swap markets. they sell off some of those credit risks. as a transition, we can start building by the capital markets even within the current structure. >> some of the technology already exists that some of the agencies. the fact that to transfer that technology and transfer it into the markets. transparency in, the agency spent 40 years building that up. the reason we should not use that same information to create a market to disperse the credit market on the other side and reduce the burden on the taxpayer. >> these would be ancillary new markets as opposed to disrupting the tba market. if not disrupt the current process. >> thanks. no further questions. >> people care about this issue. the market is really nothing different than a futures market that exists. why is it that we must have this government guarantee year there to make it work, when it wo

we have unique fannie mae and freddie mac and f.h.a. servicer guidelines, we have proposed risk retention under dodd frank which includes servicing standards. we have fhfa, fannie mae and freddie mac and ginny may setting a new compensation servicing model that reflects performing loans and nonperforming loans. we have the treasury undermaking home affordable offered recent directtives on a one-year forbearance plans, note that does not apply to fannie mae and freddie mac or v.a. loans. state attorneys general are under kfrl discusses to discuss practices and processes that will indeed lead to standards. the soon to be cfpb efforts and interagency guidelines are also being looked at to affect standards. all these efforts must be evaluated before any decisions made on any single uniform standard. just a quick note, i did visit a shop recently and wanted to see what they had implemented on the single point of contact. hundreds of people were being trained to handle the single point of contact rule, training lasted up for six weeks. once t

after all, fannie mae and freddie mac buy the mortgages and then package them and sell them.ard pressure on mortgage rates. however, it's not quite as simple as that. there are counter veiling forces as work. stay with me. typically treasury bond yields are the basis for mortgage rates. they are right now in the eye of the storm. after all, that's where s&p first did the downgrade, right? because they are in the eye of the storm, investors are rushing into these so treasury bound prices have been rising, which means their yield, their interest rates have been going lower. so as a result, mortgage rates actually have been dropping. the 30-year fixed rate mortgage right now, which is tied to the 10-year treasury note, that is at 4.5%. that's the national average according to bank rate.com. for adjustable rate mortgages tied to 1-year treasury notes, right now the average for a five-year adjustable rate mortgage is 3.2%. those are very, very low interest rates, suzanne. >> what about other loans? what does it mean for other loans, potentially? >> auto loans are typically tied to

we just heard you mention fannie mae and freddie mac. clearly, a lot of conjecture about their future. but clearly, nick, the administration is treading carefully here as well, right? >> absolutely. in some ways, ironically, there is consensus on both sides of the aisle that fannie mae and freddie mac can continue any way, shape or form similar to their current structure. on the other hand the housing finance system and the housing market is so fragile, these entities are providing life support. they're between a rock and a hard place in determining how to proceed and when to proceed. >> is that what you see happening, guy? >> yes. in the first half of this year, we tracked numbers and fannie and freddy were accounting for 70% of all new mortgages being made. >> brown: still that high? >> still that high. >> brown: even after all these years of the problems. >> exactly. when they're doing that, you really can't talk about dialing them back or changing them dramatically. i think it puts a serious debate on that on hold for a year or two.

and the standard & poor's decision to downgrade freddie mac and fannie mae credit rating and what iteans for people trying to buy or refinance a house right now. "7 on your side" put airport baggage scale to the test. michael finney checks out the accuracy. are the extra airline fees warranted? we have those stories and more at 4:00 and 5:00. >>> get your best costume out, the winchester mystery house is holding open audition for boogie men, zombie and chain saw wielders for the halloween festivities. >> to name a few. it's at the center for performing arts recital hall at 6:00. they will work for the fright night event in september. >> it's known for strange architecture, staircases to nowhere, winding hallway and secret passage ways. built in the late 1800s. the kids love it. >> fun. before we go, take a last look at the big board, the dow jones average. way down, 534 points right now. update you on all of the day's activities there at abc7 news at 4:00, 5:00, 6:00. >> below 11,000 mark and falling. thank you for joining us on abc7 news. >> "who wants to be a millionaire" is up nex

. >> another downgrade this time lowering the rating of mortgage giants fannie mae and freddie mac and the ripple effect keeps coming. >> now about 552 points down, the dow jones industrial. >> another horrendous day. >> goes down, goes up. very unusual for us. >> president obama says washington knows how to solve the problem. that politicians need to put the good of the nation ahead of the good of their parties. here's more. >> markets will rise and fall, but this is the united states of america. no matter what some agency may say, we've always been and always will be a aaa country. >> well s&p doesn't see it that way. congressional leaders must appoint members to super committee of congress by a week from today. they will be looking for more ways to reduce the deficit. president obama said he'll be giving them ideas in the coming weeks. what else can he do? he wants to extend certain unemployment benefits and tax cuts. his former chair told cnn told john king the president should go bigger and bolder. >> if i were advising the president i would say take the next couple of weeks and m

we will freddie, fannie mae have more information. we can tell you a lot about how mortgages perform in any economic circumstances in markets all overthe united states. but to be honest, brokers analysis of the various options proposed it seems to me we ought to be very careful not to have a proposal ourselves. so we are prepared and have been prepared in discussions with the administration and the congress to consider any option from one end of the spectrum of putting everything into a huge federal, to we go away and you have a private sector solution. thus far, it's worked well and people have been comfortable that we will give them a straight answer as to the pros and cons of any permutation on those themes across the spectrum. what's clear in the politics of washington and has been for some time, there won't be much movement on the question until after the presidential election. which means we have another two years to go. even the republicans talking about l.e.t. get rid of family and freddie have a footnote that says we shouldn'

who was in charge of fannie mae, barn from y. frank who is putting in the onerous. barney frank. you have got to love it? >> they did nothing to fannie mae and freddie mac in this bill. the guys who pride overruled the disaster write a bill to -- if we don't have strategies and the republicans are going to have to come up with them because it's clear the left wing democrats just don't understand free enterprise. they don't understand small business. >> not that they don't understand it they don't like it. they don't want it. they want to have distribution. if you were the speaker of the house, first of all, rate boehner. did boehner do a good job here? >> i think boehner comes out of this as the strongest person in the entire system. he was methodical. >> bill: would you have had to do the same thing as boehner did? if you say yes, you would have had to cracked whip on the tea party guys. >> you can't second-guess it he was in a totally different environ. i was. in bill clinton was dra mat tickly more reasonable person than barac

who was in charge of fannie mae, barn from y. frank who is putting in the onerous. barney frank. you have got to love it? >> they did nothing to fannie mae and freddie mac in this bill. the guys who pride overruled the disaster write a bill to -- if we don't have strategies and the republicans are going to have to come up with them because it's clear the left wing democrats just don't understand free enterprise. they don't understand small business. >> not that they don't understand it they don't like it. they don't want it. they want to have distribution. if you were the speaker of the house, first of all, rate boehner. did boehner do a good job here? >> i think boehner comes out of this as the strongest person in the entire system. he was methodical. >> bill: would you have had to do the same thing as boehner did? if you say yes, you would have had to cracked whip on the tea party guys. >> you can't second-guess it he was in a totally different environ. i was. in bill clinton was dra mat tickly more reasonable person than barac

. >> reporter: they also dominated the ratings board fannie mae and freddie mac, following a downgrade questions remain about the impact. experts believe the downgrade may cause interest rates to go up, making car loans, student loans, and mortgages were expended. >> the housing authority play cheating that americans could awaiting this and american families will be the losers. >> reporter: the us is that the other countries like japan and canada came in at the same situation just time to justify. >> unit to sit back and look into the emotions take over. >> reporter: certainly good advice for we with the thinking that tomorrow. >>> today's losses extend what has already been a miserable run. and the widely watched as widely watched s&p 500 was trading lower. today to close at 1118. that amount to a client was sending%. not one of the 500 candidates listed height of today seem like millions of senior citizens, the baby boomers and workers are watching their 4o14o1 kays shrink people want to note why there has been such a big drop. one analyst said it is nervous investors. >> is too much

you know, we're dealing with fannie mae and freddie mac or south dakota housing in our case they all have their standards of when they expect us to make contact with customers, etc. we're concerned about is a cost that they're looking at to document that we're doing what we're doing. that we are having the contact with the customer. but i think, again, our results show that we're there. so what we're looking for is that anything you're doing doesn't add cost and burden to us and we have a carveout if we're meeting certain standards. >> so -- go ahead, finish. >> our delinquency rate would prove at 1.7%, where we're 1/3 of the national average, that we're doing the jobs we're supposed to be doing. we've only had a handful of forkse -- forks -- foreclosures over the past few years and i'm talking 23 last year. i mean, that is not -- out of 5,000 loans, that's not an excessive number of foreclosures. those are typically life-event type things. a divorce, loss of job, etc. that are causing those issues. >> all right. let me ask for maybe some of the council here, does the panel acknowled

and the standard & poor's decision to downgrade freddie mac and fannie mae credit rating and what it means for people trying to buy or refinance a house right now. "7 on your side" put airport baggage scale to the test. michael finney checks out the accuracy. are the extra airline fees warranted? we have those stories and more at 4:00 and 5:00. >>> get your best costume out, the winchester mystery house is holding open audition for boogie men, zombie and chain saw wielders for the halloween festivities. >> to name a few. it's at the center for performing arts recital hall at 6:00. they will work for the fright night event in september. >> it's known for strange architecture, staircases to nowhere, winding hallway and secret passage ways. built in the late 1800s. the kids love it. >> fun. before we go, take a last look at the big board, the dow jones average. way down, 534 points right now. update you on all of the day's activities there at abc7 news at 4:00, 5:00, 6:00. >> below 11,000 mark and falling. thank you for joining us on abc7 news. >> "who wants to be a millionaire" is up n

other downgrades to follow today from fannie mae and freddie mac. from fannie mae and freddie mac.ck in a moment... and a choice. take advil now and maybe up to four in a day. or choose aleve and two pills for a day free of pain. way to go, coach. ♪ how'd you learn to do that? what'd you use? every project we finish comes with a story built-in. it's how our rough ideas become "you did that yourself?" so when we can save more on the projects that let us fix, make, and do more... that just makes the stories even better. more saving. more doing. that's the power of the home depot. right now get this vanity and matching mirror for just $99. >>> you're watching live pictures of the white house, we're expecting the president at any minute to be talking about the economy, the s&p downgrade, the jobs numbers and of course, afghanistan. meanwhile, other stories making headlines right now, right here on msnbc, massive riots in north london left 160 people behind bars this weekend. groups of young people damaged cars and set several fires after police shot and killed a 29-year-old man over a

well, we have just learned s&p now downgraded fannie mae, freddie mac, of course, the home loan folksicted, the s&p continuing its downgrade after an official from s&p said this morning, absolutely no regrets about downgrading the u.s. credit rating. we're going to continue to follow the markets and the impact of all of this coming up. o nourish plus moisturize. active naturals wheat formulas target and help repair damage in just 3 washes. for softer, stronger... ... hair with life. [ female announcer ] nourish plus. only from aveeno. ♪ [ recorded voice ] onstar. we're looking for city hall. i'm sending directions to your car. [ recorded voice #2 ] turn right on hill street. go north for two miles. ♪ [ man ] this is onstar. i got a signal there's been a crash. do you need help? yes, please. i've got your gps location. i'm sending help. [ female announcer ] introducing onstar fmv. get it installed on your car at best buy or visit onstar.com for more stores. but i did. they said i couldn't fight above my weight class. but i did. they said i couldn't get elected to congress. but i did. ♪

the turmoil may be largely driven by s and p, down grading mortgage agencies fannie mae and freddie mac leading to fears of higher rates but analysts say with a debt crisis, there is more going on. >> it's not going to be parties of the 9 ows and early part of the decade. it's a new environment. the market has to get used to it the agency that failed to predict the banking crisis is defending itself. >> we're talking about government ratings and the group i head up. that record remains strong. >> two either agencies rate the u.s. triple a, s and p says there are no second thoughts about the down grade s and p is not done and now looking at local and state governments and that kind of down grade could lead to a slow down in hiring, perhaps the last thing the struggling economy needs. >> and certainly there is a tough time for investors, what is the outlook at this point? >> we've talked to several experts who say some version of the same thing. talk to your personal advisor and there are over the long term, you need to be ready for what looks like a rough ride. >> it could be a long ride

gay lovers as a financial analyst at fannie mae? as a libertarian i have no objection whatsoever to his sexual preferences. i have a serious objection to corruption. we're talking about a deeply, deeply corrupt man whose corruption very nearly destroyed the world. another villain from "atlas shrugged" alive and well in the world is alan greenspan. what character in "atlas shrugged" is alan greenspan like? anybody remember dr. robert statler? kind of a minor character what a very key character. he was one of two college professors who was a mentor to the young john galt. and when golf was a young man, statler left academia to found the state science institute. so he could do his experimental physics free of the support of capitalist and people who pay tuition and things like that. and john galt disowned him. he damned him. at the climax of "atlas shrugged" when the world find it totally goes down the drain, the climactic scene is when the government, having expropriated dr. starr's work to create about -- create a weapon of mass dest

to move it away from fannie mae and freddie mac? mr. davidson? >> yeah, i'd be happy to. so i think right now even within the existing g.s.e. structure there's no reason why the g.s.e.'s can't work to start, setup these types of markets. there's no reason why they can't be using more external private capital in the form of insurance, either pool insurance or mortgage insurance. there's no reason they can't set up a credit default swap market or the solution i said which is set up a subordinate bond market where they sell off some of this credit risk. so as a transition we can start building private capital markets even within the current g.s.e. structure. >> thank you. mr. hamilton, you wanted to comment. >> or just point out that some of this technology already exists at the u.s. agencies. freddie mac, for their multifamily lending program already sells off the subordinate and credit trauverages of the securitizations that they create. so they're already doing it in other markets. the fact that, you know, there's definitely the ability to transfer some of that technology

. >> standard & poor's shifted its focus today to the debt of fannie mae and freddie mac the mortgage finance companies were lowered one notch from triple a to double a plus. s&p said the loss of the federal government's triple-a status was directly responsible for the downgrades. don't forget the two companies have depended on uncle sam's support for nearly three years, when they were seized during the financial crisis. >> reporter: fannie and freddie own or guarantee more than half of the nation's $11 trillion in mortgage debt. so it's no wonder that homeowners and potential homebuyers are nervous. but, experts point out that today's downgrade of fannie and freddie applies to their corporate bonds, not their mortgage-backed securities. that may be why mortgage rates today remained at historic lows, although experts say the rally in government bonds was also a factor. mortgage rates take their lead from the 10-year treasury bond. still, interest rate strategist mike schumacher says the downgrades are unlikely to move mortgage rates. >> now they're really wards of the state, so if the

i think those are loans that are already insured or owned by fannie mae and freddie mac. reducing those rates will allow for more refinancings. that lowers monthly mortgage payments and that makes it less likely those folks would get into trouble and it would also put money in their pockets. that would be a big plus for the economy. >> susie: uh-huh. some people have been suggesting reviving the first-time... the credit for the first-time home buyers. what do you think of that idea? >> i think that's an idea whose time has passed. we've had three housing tax credits. i think the first couple rounds were pretty helpful. they brought an end to the housing crash. but i think homeowners are getting to the point or potential home buyers are getting to the point where they'll stop buying and wait for next housing tack credit, so it's becoming counterproductive. folks in the real estate industry are not supportive of that idea. >> susie: mark, a big part of the whole problem... i mean, these proposals all sound good, but a big part of the problem is this crisis of confidence. wh

but many agencies are taking a big hit today including fannie mae and predy mack. >> we have more from kcbs and cbs money watch .com and even though we expected this, is this better or worse than investors expected? >> i don't know if anybody knew how far the market would drop today, other than we knew it would not be pretty and sure enough, that's exactly what we have. we are really dealing with a lack of confidence, both in the stock market, and not just in the u.s. economy, but the global economy. and that's where investors are looking to save what money they can and they're pulling out, very reminiscent of what we saw three years ago at the height of the financial crisis except we don't have any particular institutions that need to be rescued. instead we're looking at sovereign nations that need to be rescued. in particular will europe. with the aa plus rating, it is a high grade investment and very strong. interestingly today we're not seeing yields on u.s. treasuries head higher. that's exactly what the credit downgrade went after. yet money is pouring into treasuries pushing the

the snb has downgraded six fannie mae and freddie mac. they have also downgraded the government debt from 32 to date. stocks are down 336 points to 1100, basically. until 348 points right now. we will continue to monitor what is happening on wall street. last week all three indexes delivered the worst performances since to thousand eight. it looks like we might be on the way to get in here there again. more on what is happening on wall street throughout the morning right here on kron 4. >> gary from wells capital management is joining us. it seems like these downgrades are affecting the financial market more than they are bonds or treasury. >> i feel we are seeing first of all, the downgrades were to be expected. these agencies are directly to the credit quality of the u.s.. when the credit quality of the u.s. is downgraded, they would follow. people are moving away from riskier assets. treasuries are doing well. bonn we're seeing a move away from riskier assets. >> this is a knee-jerk reaction to an unprecedented event. we have not seen

as david said, you should pay attention to fannie mae and freddie mac. they may be downgraded. you should pay attention to the u.s. banks. if they're downgraded, that means you're interest rates will be going up as well. >> almost immediately on credit cards and mortgages. >> expect market volatility. warren buffett said there should not have been a downgrade -- >> there should be an upgrade. of course nothing exists like that. he's long been bullish, u.s. treasuries. he doesn't expect another recession. whether he's right or wrong, we'll see. when he talks, people listens. >> always a champion of the economy he is. >>> we're following a strike by 45,000 workers at verizon communications. one of the nation's largest phone companies. they work for verizon units providing internet and land line phone services in the northeast. the dispute involves a push to eliminate some pensions altogether and workers are being asked to pay for their own health care, in part. >>> there is a developing story outside akron. police say a family argument led to thehehooting deaths of at least eight

even when fannie mae went down in two thousand and eight i have been on the radio show in outside of san francisco explaining about the housing bubble. you know three years and one of the biggest investors in san francisco lost over a billion dollars on training make a going down and brought up the thing on their website and put it up and said you know we had no idea there was a crowd well i was on the radio free europe since nurses and so you through housing saying you know describing the problem and created you know ok imagine fannie mae freddie mac. they were caught committing fraud they were bailed out by the government and there are liabilities are now the taxpayers liabilities we've talked about we talked about wells fargo talked about bank of america all the banks committing mass of private securities fraud accounting fraud. and. what role in the global accounting and securities fraud that you see in the banks how central is the city of london factor into this at max clearly the city of london is very important and i would see the united states the european investment interest

s&p downgraded fannie mae and freddie mac from aaa to aa plus.n a statement, s&p said the downgrades reflect their direct reliance on the u.s. government. >> things have been -- >> reporter: lawrence is with the national association of realtors. what impact will this downgrade have? >> well, certainly the downgrade can have a negative impact in terms of rising mortgage rates, and also you can damage consumer confidence. many people who are ready to enter the housing market may now become more hesitant about entering. >> reporter: interest rates have been at historic lows, but the downgrade could over time reverse that trend. if that happened, families with adjustable rate mortgages ready to reset would have to pay more for their homes. another worry is that the downgrade could lead to a further tightening of credit standards. >> that makes it hard to get a loan, even though the rate may be very low. it's hard to get the loan at all. and that retards the recovery. >> reporter: but so far, bond investors have not been panicking. in fact, interest r

we will freddie, fannie mae have more information. can tell you a lot about how mortgages perform in any economic circumstances in markets all overthe united states. but to be honest, brokers analysis of the various options proposed it seems to me we ought to be very careful not to have a proposal ourselves. so we are prepared and have been prepared in discussions with the administration and the congress to consider any option from one end of the spectrum of putting everything into a huge federal, to we go away and you have a private sector solution. thus far, it's worked well and people have been comfortable that we will give them a straight answer as to the pros and cons of any permutation on those themes across the spectrum. what's clear in t politics of washington and has been for some time, there won't be much movement on the question until after the presidential election. which means we have another two years to go. even the reublicans talking about l.e.t. get rid of family and freddie have a footnote that says we shouldn't do i