Fannie Mae & Freddie Mac Government Take-Over
Last week there was some very HUGE news in the mortgage industry with the U.S. Government bailing out both Fannie Mae & Freddie Mac as they were facing financial issues in today’s hurting mortgage industry.
Short Term - This was a must for the mortgage industry. If the government wouldn’t have stepped in and bailed out these two giants, what could have happened otherwise would have been catastrophic. High fives should be going around the house with this news. This is going to give our conforming industry back the stability it needs to continue funding loans and driving in new business. I wouldn’t be surprised if we see a drop in interest rates down to the 5.500% range and rally back and forth for some time because of this huge take over.
Folks, please also note that this is not the end of the mortgage crisis. All this is really going to do is allow us to still continue to move forward with the same crisis we were already facing in our mortgage and economic economy. Why is this good news then? Because if what could have happened if the government would not have bailed these giants out would of destroyed or us. Imagine for just a bit if the conforming lending had just the same if not worse restrictions on it as the jumbo loans do now. This could have and would of shut us down and caused worldwide effects.
So Short term, this is great news because we can continue to move forward. What we have to keep our eye on is the long term effects. There are still major companies in economic shambles and the government can’t help them all out. What will happen to these companies, and how will that continue to affect our economy?
Regards,
Fred D. Williams, Jr.
Mortgage Advisor
Mid Valley Financial Service
(559) 256-3645
Tags: -1, fannie mae, freddie mac, government
September 19th, 2008 at 7:29 pm
While I understand that people are upset that they got bailed out there was a huge risk of not bailing them and what turmoil it could have brought to the real estate market and the economy in general. Its nice to see rates this low. I think this is fastest rates have dropped in over 10 years. (There was a big drop back at the start of 1994).
September 25th, 2008 at 3:30 am
Great post, Fred. I’ve seen rates come up a little this week from that 5.5% low, but things are still looking promising.
October 3rd, 2008 at 1:54 pm
Fred - Great post. I agree - I think there will be more bad news about banks in the future. With the federal bailout I think people will be a lot more at peace.