The Federal Reserve has agreed to purchase housing related debts of Fannie, Freddie and Ginnie. More specifically $500 billion of Mortgate Backed Securities. They say, this will free up money for lending new mortgages and help drive down interest rates. Once interest rates are decreased, more consumers will help reduce inventory. Lowering inventory will help increase purchase prices.
What does this do for people currently facing foreclosure?
The important question. Will this help the economy? I know there are some that believe this will only acerbate the problem. I like to think that intervening will help, if it's done intelligently. However, I don't know if throwing money at the problem helps in the long term. I guess we'll have to see.
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