The Fannie and Freddie Bailout Winners
Sep 9th, 2008 | By bea | Category: Blog, FinancingOn Sunday, the Treasury Department and the Federal Housing Finance Agency jointly annonced their plan to assume control of Fannie Mae and Freddie Mac – mortgage companies that own or guarantee about half of all U.S. mortgages.
But what does this news mean to home buyers and sellers? Generally, it brings stability to the mortgage market, so it is good news for buyers and those who are hoping to refinance their mortgages. Most experts expect mortgage rates to drop over the short term. Mortgage rates fell sharply Monday, as investors reacted to the government’s takeover.
It is also good news for sellers: If mortgage rates fall, this will attract more potential buyers into the market.
But for homeowners who are already behind on their mortgage payments or owe more than their homes are worth the takeover offers little extra relief.
We will need to wait and see whether Fannie Mae and Freddie Mac – under government control – will be able to do more to prevent foreclosures.
