(Published by South China Morning Post, 20 Aug 2008) On the eve of the first anniversary of the global credit crisis which continues to dominate news headlines, two words which Hong Kong people understand very well – negative equity – is becoming more of a reality in the US housing market. According to the S&P/Case-Shiller home price index, prices in several of what were the most attractive housing markets such as San Diego, Los Angeles, Phoenix, Las Vegas and Miami have declined in the past year by 25 to 35 per cent, whereas the national average has declined 10 to 15 per cent.
(Published by South China Morning Post, 26 Mar 2008) Recently, as the global credit crisis continued to unfold, the two largest quasi-government mortgage companies in the United States, Fannie Mae and Freddie Mac, were again subjected to intense scrutiny. While several issues have been raised, one critical concern was whether their deteriorating financial health was a result of their expansion into mortgage products outside of their primary mission. Considered as government-sponsored enterprises or GSEs, Fannie Mae and Freddie Mac were created to operate in America’s secondary mortgage market to ensure that loan originators have sufficient funds to lend to homebuyers at low interest rates.