Fannie Mae and Freddie Mac Rescue and What It Means for You

Over the recent weeks the government has placed both Fannie Mae and Freddie Mac into a conservatorship, taken on full agency responsibility and started addressing the debt and internal management and accounting delinquencies of both companies. The government's backing served as an economic life jacket benefiting not only Fannie Mae and Freddie Mac, but the nation as a whole.

According to the United States Secretary of Treasury Henry Paulson, the three objectives of the government take-over include, market stability, mortgage availability and taxpayer protection. Although the objectives are clear, many consumers are unsure what to expect over the next few months as the Fannie Mae and Freddie Mac conservatorship and financial bailout plan unfold. Below is a brief overview of the impact of the Fannie and Freddie take-over and what it means for you, the consumer.

Fannie and Freddie
Federal National Mortgage Association, better known as Fannie Mae, and the Federal Home Mortgage Corporation, known as Freddie Mac, have been privately owned and operated since 1968 as government sponsored enterprises (GSEs). Both Fannie Mae and Freddie Mac have purchased mortgages from banks, savings and loans and other lenders to generate cash for the mortgage brokers and encourage more home loans. With the implicit support of the Federal Government, Fannie Mae and Freddie Mac have financed most of the home loans being made in America. Now that this government support is widely known and in effect, consumer faith in both agencies has sustained.

Borrower security is of the utmost importance during this time of financial uncertainty. In order to uphold the mortgage and housing industry and provide affordable home loans to consumers, James B. Lockhart, director of the Federal Housing Finance Agency (FHFA), has taken control of Fannie and Freddie which, in turn, will facilitate the following:

• Lower mortgage rates
  Mortgage rates are expected to fall as the United States Treasury purchases mortgage-backed securities (MBS) and bad assets from both Fannie Mae and Freddie Mac. Now that the Treasury will buy the mortgage backed securities, their prices should rise, as demand increases, and MBS yields drop. As yields drop, so do mortgage rates, thus making home ownership attainable and affordable.
  
  Both Fannie Mae and Freddie Mac announced the cancellation of their planned 0.25 percent charge increase to bank's adverse market delivery fees in hopes that lenders would pass along savings to borrowers who have not yet closed on their mortgage loan. Call First Capital Mortgage Group, LLC at Office: 617.464.1004 to learn more about our mortgage programs and competitive interest rates.
  
  
• Potential modification of delinquent mortgage programs
  In order to encourage more affordable lending programs for those borrowers who are delinquent in their mortgage payments, Fannie Mae and Freddie Mac have initiated additional financial incentives for lenders that modify their troubled client's loan programs.
  
  A First Capital Mortgage Group, LLC mortgage specialist will help you assess your current financial situation to determine if you qualify for a new, low fixed rate loan. Call Office: 617.464.1004 today to schedule a meeting.
  
  
• New mortgage rules
  With the presidential elections just around the corner, government officials are holding off on determining any new lender requirements, yet many are speculating that borrower credit score requirements, loan-size-to-home-value ratios and down payment requirements could come up for review.
  

As the nation draws closer to selecting the next president, consumers throughout the nation prepare for economic change, yet the economy's financial situation is not something that can be fixed over night. Working with a reliable mortgage specialist and practicing responsible borrowing is the key to staying on the upside of the economic downturn.

Keeping You Informed
First Capital Mortgage Group, LLC is dedicated to keeping you informed of the latest market trends and mortgage options. Call us today 617.464.1004 to obtain custom loan options designed to fit your needs and help you obtain your ownership goals.