Fannie Mae, Freddie Mac, Bank of America, JPMorgan Chase and Boeing

CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Fannie Mae (NYSE: [ FNM ]), Freddie Mac (NYSE: [ FRE ]), Bank of America (NYSE: [ BAC ]), JPMorgan Chase (NYSE: [ JPM ]) and Boeing Company (NYSE: [ BA ]).

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Here are highlights from Tuesdaya�s Analyst Blog:

Housing Prices Mixed in March

While this is a mixed report, keep in mind that it is coming in the context of massive government support for the housing market. Economic theory tells us that when a transaction is subsidized, both the buyer and seller will share in the subsidy. The sellera�s share of the subsidy shows up in higher prices.

Clearly, the home buying tax credit is a subsidy to the transaction. A more indirect subsidy is the Feda�s now-completed purchase of $1.25 Trillion in mortgage paper, mostly backed by Fannie Mae (NYSE: [ FNM ]) and Freddie Mac (NYSE: [ FRE ]). That held mortgage rates below where they otherwise would have been, and also helped to support housing prices.

While that program has now expired, the crisis in Europe has caused the yields on T-notes to plunge, and mortgage rates have followed suit. The tax credit support is in the process of coming off. In the Case Schiller data we should see its effect for one more month, as house have to be under contract by the end of April to qualify.

It seems likely that when the government crutches come off that house prices could start to fall again. However, with prices already down by close to 30% from the peak, prices are not nearly as out of line with incomes and rents as they were a few years ago. Thus, any future declines are likely to be moderate, at least relative to what we have seen already.

Homeowners Equity to Take Another Hit?

Given the leveraged nature of the housing market, even small declines in the price of a house can have an outsized impact on homeowners equity. Homeowners equity is, or at least was, the principal store of wealth for the vast majority of Americans.

Each decline in home prices pushes more homeowners underwater. The further underwater people become, the more likely they are to simply walk away from their house. Sometimes they will arrange what is known as a short sale, where the house is sold for less than the value of the mortgage. If there is a second mortgage (and homeowners lines of credit of HELOCa�s are generally second mortgages) on the property, it is usually wiped out.

Others will simply stop paying their mortgage and live rent- and mortgage-free until the sheriff eventually shows up to throw them out of the house. Neither course of action is good news for the big banks that have large exposures to the residential mortgage market, like Bank of America (NYSE: [ BAC ]) or JPMorgan Chase (NYSE: [ JPM ]).

Earnings Scorecard: Boeing Co.

Following the earnings release of Boeing Company (NYSE: [ BA ]) on April 21, analysts covering the stock have become apprehensive of its near-term prospects and revised downwards their estimates. The market has reacted similarly, and the stock to date has fallen by approximately 16% subsequent to its earnings release.

The Street was apprehensive of Boeinga�s ability to recover since its commercial airplane deliveries were badly affected by cancellations and deferment from customers recovering from the aftermath of the worldwide recession.

Boeing following the earnings release witnessed mixed estimate revision trends for the short and the long term. Over the past month, only 3 analysts (out of 22) revised estimates positively for the upcoming quarter, while 2 revised their estimates downward.

For fiscal 2010, all 12 analysts tracking the stock are waiting on the sidelines for any news trigger for revising their estimates. The stock is currently trading at a premium to the peer group and the S&P 500, based on forward earnings estimates.

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Fannie Mae, Freddie Mac, Bank of America, JPMorgan Chase and Boeing