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Can anyone explain in plain English, how is it will effect me as a buyer? Does it mean...I can't afford a house anymore?
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no. it probably doesn't mean much. it won't stop depreciation. it won't stop foreclosures. it won't stop arms from resetting, etc.
If you couldn't afford a house yesterday, you can't afford it today.
means that instead of getting health care cost relief or better social security when you retire, our generation helped pay for the hummer for your neighbor that you never undestood how he could afford.
if you can afford it today, you will still be able to afford it tomorrow
Last Thursday I was walking down a DC street and saw this big red brick building to the side. I didn't really pay too much attention (was looking for another address), but noticed that for a large estate-like complex, they had some intense security going on there. Low and behold it is the same building I'm seeing all over the news, Fannie's HQ.
that's so cool!
it means pretty much no difference to you as a home buyer.
Are there any programs out there that will acknowledge those home owners that haven't foreclosed and have gotten behind on payments. We need those programs to give lower rates to those people who haven't "F"ed the system for the rest of us. It's just like in grade school. We all get in trouble for the few that screwed it up.
The gov't bailout of FNMA and FDHLC will probablly (and hopefully) mean lower mortgage rates. We're already seeing lower rates today, but it remains to be seen if it will continue. Banks are still suffering loses, and might use this as an opportunity to keep mortage costs and rates to help shore up those loses. Only time will tell.
Lower rates means lower monthly mortgage payments and make it easier to qualify for a mortgage. It might help slow down the free fall in housing prices. However, if the prices of homes are still out of reach, it won't help the overall housing market. The average prices of homes in any given area still have to be in line with the area's median income.
Also, it won't stop foreclosures, short sales, ARM resets, or otherwise help people who are upside down in their mortgages. For those in higher rate mortgages and in ARMs that are due for resets, now may be a good time to refinance.
i just locked in a 5.875% rate FHA 30-year fixed loan for $650,000. he's one of the top lenders here at zillow.com. so far i'm pleased w/ his service. i guess this is a result of the freddie/fannie shake up.
Govt bail out Freddie and Fannie, what does it mean for me?
My 9 month old daughter has an even larger future tax liability than before...
Thank you for your explanation.
''top lenders here at zillow.com. 'Top Lender? Looking for clients on a zillow board? hahahaha
Let me explain what Fannie and Freddie DO. They INSURE that you will pay back the loan by putting a stamp of approval on your loan. If you don't pay it back, they pay a percentage of the loan. They only insure a loan up to 80%. That is why we USED to put down 20%, because the agencies wouldn't insure higher. They then kick in and pay a PERCENTAGE of the 80%, not the whole thing.
So, what this means to you is that you are being LIED TO. The natl number of a 15% loss is WRONG, since fanny and freedie are having to pay their insurance. It means that the people that orignally took out the loan already lost 20%. This probably brings you to the next logical question. Why are we bailing out an insurance company?
Well, you would have to examine the world economy to know that, since the loans were packaged and sold on the world market. Basically, if we don't make good on fannie and freddie, the WORLD will decide, and rightly so, that our money was no good, just like fannie and freddie. I would say that a lot of countries are calling the president to get this bailout.
The ironic thing is that if we let them fold, it's not on the usa, since we don't hold the notes anyway. Why we are paying taxpayer money to the world I have NO idea!
what do you mean Socal the OG?
if you look to the right of the page below the Mortgage Rates, you'll see a list of top lenders...he's one of them. i'm not looking for a clients. i'm the customer...not the lender. get a clue.
All I see is a 'mortgage broker' not a direct lender. You get a clue.
(1) expect big changes to happen how morgages are handled... more regulation and no 'hanky panky" lending. Therefore you will have to have sqeeky clean credit history and lots of proof of income/employment.
(2) Both Freddie and Fannie will expand their porforlios but will shrink by 66% ... they will be
shrink to 33% of current size. Impact ? hard to say...
(3) Your taxes will be higher!
Short term, lower interest rates. Long term, much tighter lending standards and fewer mortgages issued. In between, maybe more crossover between HUD and the lending instututions?
National Debt? It will always rise; this will have some impact, but not significant compared to all our other deficit spending.
Taxes? No impact; we don't intent to ever pay the debt off, and we always intend to pay the interest with a combination of inflation and more borrowed dollars.
Exiting stock holders? No more dividends, and may not get full value back, but probably better than if the government left them on their own to sink.
Here is a good blog post worth reading, written by Dan Green.
And here is a blog post with some further thoughts and links.
Bank failures. Some impact to those mutal funds that own their stock. Higher federal deficeits, and probably higher inflation as Washington prints more greenbacks.
debts- we want other countries to continue to buy our debt. we don't have tons of credibility on the international stage anyway, but not propping up the F-Ms would isolate us a lot. like a global "Time Out, go to your room and think about what you've done"... which no voter/toddler is going to approve.
Eh. It all sucks. Gonna pick up my kid from school and enjoy the weather. Maybe pick some tomatoes. B!tch globally pick locally. ;)
1) Lower interest rate on mortgages
2) Tighter lending standards
3) Decrease in value of dollar (moderate)
1) is subject to time. Namely, the amount of time the US gov't continues to be willing to buy the risk from the market. Because when that stops or slows down (or fails to keep increasing), boom. Rates start going straight up.
Rates start going straight up. Can't help it... isn't that another 'H' sign? lol
If you think Fannie and Freddie are only insurance companies - you might wanna read this article.
"To review the basics of what Freddie does: they buy mortgage loans on the secondary market. These purchases of loans result in two different "portfolios" of loans: the "retained portfolio" and the "guarantee portfolio." The retained portfolio consists of loans and MBS that are owned outright by Freddie. That means Freddie's capital is invested in these loans. Freddie gets the capital to invest in the retained portfolio in large part by issuing notes and bonds--what everyone calls "agency debt." The retained portfolio constitutes an "asset" on Freddie Mac's books (net of the loss reserves), and the debt-funding constitutes a "liability" thereon.The "guarantee portfolio" consists of various MBS that Freddie guarantees the credit risk of, but does not invest the capital in. The capital to fund these securities is provided by investors who buy MBS. Therefore, the total principal amount of the guarantee portfolio is not an asset on Freddie's books (it is an asset on the MBS investors' books). What shows up on Freddie's balance sheet is the "guarantee asset," which is the fair value of the guarantee fees received, and the "guarantee obligation" (over on the liability side) which reflects the fair value of the projected credit losses".
So how does it work when a bank approves a short sale on a home loan? Does Freddie and Fannie pay the lender the shorted amount or part of it?
Rates going up would not be a "H" sign. It would be a "D" sign. Higher nominal rates would cause price deflation, not inflation. Especially in the US since higher rates directly impact consumer spending.
One problem with your analysis Debts is that each house is not in foreclosure by "X" amount. It's all or nothing. Yes, the average may be 15%, but any AREA over 20% is causing a hit on F&F. Since they are overleveraged, any hit hurts. The Fed saw that F&F had about enough capital for 6 more weeks and moved in.
Of course F&F would have some 'keeper' notes. But that is also offset by stocks. Which still leaves their primary goal to 'guarantee' loans, which is the role of an insurance company.
Good point Buy. On the other hand, when socal and florida are hard hit, with some of the most expensive junk homes, it is 6 digit losses. A slight fall in NY could also easily be 6 digits. Many other areas could have less of a fall, with a larger percentage and still not hit 6 digits. This in turn makes F&F in real trouble. There's simply not enough to counter the 6 digit losses.
It means LOWER interest rates. That's all you need to know.
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