Government Take OVER!
Fannie Mae and Freddie Mac (if you want more info on these companies click on the name and you will be directed to their wiki page) are now controlled by the US government. This is a huge step in the “Mortgage Meltdown of 2008”.
“Effectively, the federal government has now become the nation’s mortgage
lender”, Mark Zandi, Chief Economist at Moody’s economy.com
How did it get to this point?
Well for starters, the housing market has been in ruins this year. Last quarter, Fannie Mae lost over 14 billion dollars and they are continuing to lose money on a daily basis. Obviously, as with any company, you can only lose money for so long before you are forced to close the doors.
Basically, both of these companies went up in smoke and were bailed out by the Fed.
If they just shut their doors and file bankruptcy, our financial system would blow up in our face. Not only does it affect all homeowners but, a lot of investors would pull their money from the US stock market and all US government backed companies to flee to safety which would cause a meltdown that would be catastrophic.
What does this mean for homeowners?
First, LOWER MORTGAGE rates are on the horizon for homeowners. People who are looking at buying homes are going to enter a historic window of low rates and low home prices. In theory, this should help to stabilize home prices and help to take a large amount of the inventory off the books.
Second, more lending options should be on the table soon. All of the experts I have read on this topic all predict that Fannie and Freddie will now release more options for homeowners and prospective buyers.
What does it mean for us, the tax-payers?
We will be on the hook for all of the debt for these companies. Some of the numbers I have read estimate the cost to be $100 billion and up!!! Sounds like a lot of cash to help bailout stockholders but, is it?
I think that no price tag is too great to help save our housing market. If this helps to stabilize the market, we will see a huge profit off of this investment. I think if you looked at the budget you would be shocked to learn how much money America sends overseas to help other countries. Well, now it’s time to bailout America and help our own people.
Keep in mind, this takeover is not to bailout foreclosures and home investors; this is to bailout the average American homeowners. It will affect every single person who holds a mortgage now and in the future!