Thursday, October 16, 2008
Housing Market Should Improve With Takeover of Fannie Mae and Freddie Mac
the U.S. Treasury Department announced its takeover of mortgage-finance companies Fannie Mae and Freddie Mac. From it should come a much-needed boost to the nation's housing market.
“The takeover should help stabilize the housing market on the national level which would, in turn, help us in Kentucky as well,” said Robert Damron, president of the Kentucky Association of REALTORS®. “We could see interest rates continue to fall in the coming months, financing for first-time buyers pick up and housing inventories adjust back to normal levels. All of this would help keep home prices in the state from decreasing as they did in so many areas around the country.”
Fannie Mae and Freddie Mac, which together back around $5 trillion in home loans or about half the total in the U.S., don't offer mortgages themselves. But they do play a central role in the American system of home finance. The two mortgage giants buy home loans from banks and others lenders that make the initial loans, either keeping them as investments or packaging them for resale to investors. These two government sponsored enterprises, or GSEs, have been battered in the past year by declining home prices and rising foreclosures.
Although Kentucky does see its share of foreclosures, it consistently ranks in the bottom third of all states in the number of foreclosure filings according to a report released by RealtyTrac, the leading online marketplace for foreclosure properties.
“The rescue plan offered by the federal government could significantly help those looking to buy a home or hoping to refinance their mortgages if the announced takeover continues to lower interest rates,” continued Damron. “Unfortunately, the plan will offer little, if any, help to struggling homeowners who are already behind on payments and facing foreclosure.