With the easing of lending reserves yesterday, Fannie Mae and Freddie Mac may now absorb more problem home loans that were responsible for slamming on the brakes of our housing markets. The Office of Federal Housing Enterprise Oversight announced it was lowering the amount of required reserves for Fannie and Freddie from 30% to 20%. With less funds needed in reserve, an estimated $200 billion more is available to buy up the problem loans and bundle them to be sold to investors as mortgage bonds.
It is believed that this along with recent actions to increase the FHA conforming loan limits( although these new limits expire at years end) will go a long way in helping states with high cost housing absorb more of the jumbo loans that were previously too high priced to be in the portfolios and make more loans available on more favorable terms to qualified consumers.
These recent actions may actually help to put a floor under home prices and yield to a new surge in home sales. For those of us in the higher end housing market, this is certainly welcome news.
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