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Genie Heroux, Real Estate Pro in 02646

With the passing of the Rescue Bill to assist with the housing crisis by means of propping up Fannie Mae and

Asked by Genie Heroux, 02646 Mon Jul 28, 2008

Freddie Mac, caveat emptor; if it sounds too good to be true, it probably is. Of course, this is a bailout for the mortgage market, not Fannie and Freddie shareholders. With Fannie and Freddie as practically the only viable buyers of mortgages left - the government may be tempted to coerce them into buying more varied types of mortgages that could further decrease their stability down the road. Pair that with the recently rising mortgage rates---plus, with Treasury involvement in Fanny and Freddie, a rise in Treasury yields could actually further squelch the housing market, since government bonds are the benchmark for borrowing costs thru-out the economy. As for long-term repercussions for the real estate market, is this, then, steering us toward financial stability----or ultimate demise? What do you think?

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Actually I think that the government is more likely to beef up the qualification standards while moderating the current interest rates so that fewer home owners will lose their homes through foreclosure. Perhaps payment terms will be more flexible also. However, I don't see the Feds loosening the rules and going to no doc loans, etc. They are very likely to tighten up on new loans. My read on this new legislation is that they are trying to plug the leaks a bit with keeping loans that are worth saving - people who could pay if payment were lower, for example. I will watch for others opinions.
0 votes Thank Flag Link Mon Jul 28, 2008
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