Fannie Mae Freddie Mac Bailout

What does the Fannie Mae and Freddie Mac bailout meant to home buyers and sellers?  The bailout could mean lower interest rates, which will hopefully encourage buyers.  The expectation for a 30-year fixed conventional loan rate to fall over the next few weeks as much as a half percent.  Unfortunately, the declining housing market will not allow the rate to fall any lower.  The bailout isn’t a cure all, but maybe it will stimulate the housing market and get buyer’s out of rentals and into homeownership.

Fannie Mae and Freddie Mac play a crucial role in the mortgage industry by buying mortgage loans from banks, which in turn allow banks to continue to have the revenue flow to make additional loans.  The government has placed Fannie and Freddie into a conservatorship, which means the government is promising investors that the companies’ debt is as safe as the Treasury Department’s.

The long term plan with this bailout is to get more buyer’s into the market that will hopefully lead to a more stabilized housing market with some price gains.  These price gains will help current homeowner’s who are struggling with making their mortgage payments.  If homeowner’s can just hold out a little longer, they will hopefully avoid foreclosure.

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Tags: buyers, Fannie Mae, foreclosure, Freddie Mac, government bailout, homeowners, mortgage, sellers