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NEW Unlimited support for Freddie and Fannie from the Treasury

Real Estate Broker/Owner with HomeSmart Fine Homes and Land BR527727000

The Treasury department is now committed to support Fannie Mae and Freddie Mac with as many billions of dollars as is necessary to get them through the next few years. There'll be no limit whatsoever anymore.

the Obama administration is writing a blank check, the significance of the move for real estate is potentially huge, for several reasons.

Fannie and Freddie provide funding for well over half the U.S. mortgage market -- making home sales and purchases possible for hundreds of thousands of consumers.

The fact that the two companies have an explicit, full faith and credit backstop from the U.S. Treasury means that Fannie and Freddie can borrow in the capital markets at more favorable rates. Those lower costs of capital can then be passed along - at least in part - to home loan borrowers in the form of lower interest rates.

Finally, a key reason for the policy change - which also included permission for the firms to retain larger mortgage-asset portfolios - is to help Fannie and Freddie provide deeper loan modification assistance to greater numbers of seriously troubled borrowers.

Both companies are now expected to reach out and offer loan principal forgiveness to delinquent and underwater home owners - something that the current Obama loan modification program does not permit.

With the huge backlog of homes in the pipeline ready to be foreclosed -- this sure could  help with 

stabilizing supply and demand in the resale market!


Randy Schulenburg
Schulenburg Realty, Inc. - Pingree Grove, IL
Schulenburg Realty, Inc.

We'll see where all this intervention leads us.  For now I'll just make hay while the sun is shining on support for our messed up mortgage and real estate markets.

Jan 04, 2010 08:23 AM
Tony Grego, 317-663-4173 #1 Trade Association for Alternative Inv
REISA - 317-663-4173 - Indianapolis, IN

Been reading about this. Just hope get get back in the MBS market. If not rates will be soon in the 6 range


Jan 04, 2010 08:23 AM

I can't believe you honestly think this is a positive move.  It will backfire, like everything else the government has done, and don't be surprised if we no longer have any semblance of a free market (let alone a viable currency) after this administration is done.  And no, irresponsible people should not receive principal reductions.  It is an outrage to those of us who have made mistakes, have not been bailed out, and have now learned from our mistakes.  People who are bailed out will never learn, and do you think by doing this, there is going to be any sustainability in real estate?  Any positives in real estate will be only temporary and about as successful as cash for clunkers (if even as).

Jan 04, 2010 01:29 PM

What would happen tomorrow if all the people who are delinquent are foreclosed upon?

It is my feeling that this number would be mind numbing and you think home values are low now!



Jan 06, 2010 12:20 AM