Well, last I checked the US government has never gotten involved in anything that didn't cost the tax payers billions, but hey, that's what they figure we (the tax payers) are here for.
Interest rates on mortgages and their relative spreads to indices that you, me and the rest of the world can actually view changed dramatically yesterday in the wake of the government's overtaking of and subsequent replacement of the CEO's and the entire board of directors of both organizations (Fannie & Freddie) has calmed the fears of the buyer's of mortgage backed securities. The "spread" or the amount an investor would need over a particular index to feel comfortable with the risk of that investment changed dramatically yesterday. Most investors compare the mortgage backed securities to the ten year treasury. Now, I know many will argue with me that mortgage backed securities are not priced to the ten year and that is true, but my decade of experience on Wall Street tells me that this is the "index of choice" for investors wanting to invest in them.
The "spread" between mortgage backed securities and the ten year treasury hit an all time high last week. Yesterday, the ten year bond performed admirably but the Mortgage Bonds kicked some serious butt. This led to a dramatic drop in spreads to the ten year and a dramatic drop in interest rates. Now, I am not going to get into this whole "how the markets work thing" if you want info on swap spreads, etc. that price this stuff http://behindmarkets.blogspot.com/2008/08/mbs-spread-widen-at-historical-levels.html is a great jumping off point and your local community college and a degree in finance and economics is a good follow-up.
Frankly, as for the future of the mortgage industry neither Fannie nor Freddie is of my concern. They will survive. The biggest issue in my opinion is mortgage insurance industry. If this falls everything goes away but 20% down loans. Here is a good one to take a look at with a 1 year history of a -85.32% share price! http://finance.aol.com/quotes/ambac-financial-group-inc/abk/nys/historical-prices Many mortgage insurance companies are compressing their standards and this is ultimately what is leading to risk based pricing and many other underwriting issues you are seeing out there.
Rates coming down, that is great and I expect to see it through year's end, but the real issue here is the American consumer and his insatiable appetite for debt and the lack of repercussion for repaying it.
I have went so far as to create my own credit repair business. No, I don't sit home in my underwear cranking out letters to credit bureaus. Instead, I have hired the best processing company I could find in the nation to do that. We operate via the web in every state. I used to refer out clients to another credit repair company who had decent results but typically charged an upfront fee of $1200.00 or more. Credit repair is not my primary line of business, but I have put several people through the program who could have not gotten mortgages before, or who would have been subject to strict risk based pricing that no longer are. The results have been an increase in my business and that of my referral partners.
As a REALTOR, I would suggest you refer your clients to a reputable credit verification/correction company. Fact is over 92% of all credit reports contain inaccurate data. My company http://www.EverestCreditServices.com or http://www.Credit2468.com can help your customer. We offer a MONEY BACK GUARANTEE and if we ultimately do the loan for them we will even rebate the full amount they paid as a lender credit at closing. Initial results only take as little as 45 days.
As an added perk, we will pay you a $25.00 referral when the person signs up. This is not a RESPA violation as it has nothing to do with the loan or settlement. We can even provide a link on your website (as you know this makes it easier for the search engines to find you when you link with other sites). We will also, always direct the person back to you when the credit is good enough to get a loan.
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