Do you wonder what the California Association of Realtors tell us what this historic change means? The newspapers will never give you a complete view such as this.
Feel free to take this and inform and educate everyone on the future example shown to us here..Those with the 30 year fixed…I congratulate you..
I think we should all go get one…if we can.
Monday, September 08, 2008
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®
Sept. 8, 2008
Dear C.A.R. Member:
This weekend, the U.S. Dept. of the Treasury placed Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs), into a conservatorship. The federal government is authorized to take up to an 80 percent stake in the companies, and, as part of its duties under the conservatorship, will review both Fannie’s and Freddie’s financial condition quarterly, as well as inject money into the operations as needed.
Under the conservatorship, both GSEs will be allowed to increase their mortgage funding over the next year and a half, then, beginning in 2010, the plan calls for a reduction in their portfolios of 10 per cent a year until they have been reduced to $250 billion. As part of this weekend’s action, both CEOs were relieved of their duties and Herbert Allison, former Merrill Lynch vice chairman, and David Moffett, former U.S. Bancorp CFO, were selected to lead Fannie Mae and Freddie Mac, respectively.
In light of the U.S. Dept. of the Treasury’s action, C.A.R. today reaffirmed its support for Fannie Mae and Freddie Mac and their countercyclical roles.
While the short-term impact of the Treasury’s actions over the weekend served to calm the markets and restore confidence, in the longer term these entities need to be able to fulfill their historic mission. A privatized Fannie and Freddie will short-circuit the countercyclical role the GSEs have played during precarious times in real estate markets.
Without an institutionalized mortgage-backed securities market, mortgage capital eventually will be less predictable and more expensive, and adjustable-rate mortgages could become the standard loan for home buyers, as could higher down payment requirements. The 30-year, fixed-rate mortgage as we know it will no longer be readily available for most home buyers and may effectively disappear. The result could be a dramatic decline in homeownership rates in California and across the nation.
C.A.R. is concerned that the Treasury, and Fannie Mae’s and Freddie Mac’s new CEOs, will overreact and change the mission and role of the GSEs. Wall Street and investors are understandably reluctant to buy mortgage backed securities (MBS) that are not either originated from or guaranteed by Fannie or Freddie.
The GSEs hold or have securitized nearly half — roughly $5 trillion — of all mortgages in the U.S., and in the current environment with private lender constraints, they account for the vast majority of all new mortgages in California.
We have just recently begun to see an increase in home sales, currently at nearly 490,000 units on an annualized basis, up from 284,000 in the fourth quarter of last year. The most significant, reliable source of home loans in California today are financed by either Fannie Mae or Freddie Mac. California’s and the nation’s housing markets simply cannot withstand the financial rug being pulled out from beneath them. Additionally, the repercussions this could have on the already weak economy could be devastating.
C.A.R. is urging lawmakers to support continued government involvement in supporting the institutional secondary market and its role in creating homeownership opportunities. While we applaud the U.S. Dept. of the Treasury for increasing the GSEs portfolio limits, we will be asking Congress to enact legislation to ensure the two companies continue to fulfill their mission.
To help your clients understand the role of the GSEs, please take a look at a new video featuring C.A.R. Executive Vice President Joel Singer at http://www.car.org/newsstand/video-js-gse. In “Fannie and Freddie: Why They Matter to You,” Joel explains the often confusing but critical role Fannie Mae and Freddie Mac play in the housing market in clear and concise terms. I’m also featured in a new video developed especially for our members about the GSEs. You can find “Understanding Fannie and Freddie” on the car.org home page at www.car.org. I hope you find them useful. We’ll also be tracking the story for you as it develops in Wednesday’s “C.A.R. Newsline,” and will have additional information to help you make sense of the story for consumers in this Thursday’s edition of “Market Matters.”
Sincerely,
William E. Brown
2008 President
CALIFORNIA ASSOCIATION OF REALTORS®
1. Fannie Mae and Freddie Mac raised limits “late” in the game and the sub-prime could not have done the damage it did had they entered sooner..some say…what about you?
2.Is it good to refinance now and lower the cost of your mortgage?400Thousand have been helped
3. If you have a high debt to income ratio will that hurt or help? The government ways if it helps you then you have to share in the profit with the gov when you resell it.
3. First time home buyer tax credit of 7500? NO-It is a zero % loan and it has to be paid back.
4.Immediate new deductions on property taxes?
5. Is 2010 or 2111 the year of the pick up for Real Estate?
6. Will there be 10 years of unparalleled growth?
7. Can you get a loan?
8. Is California ahead or behind the curve?
9. Have you found a Realtor on Linkden or Facebook?
California facebook Fannie Mae Freddy Mac lenders linkden loan refinance. buyer tax credit sales subprime
