NEWSFLASH!
Fannie and Freddie: What the Bailout Means
Mortgage Rates Have Dropped & Buyers Are Buying!
The U.S. government takeover of Fannie Mae and Freddie Mac made history Sunday as they seized troubled mortgage giants Fannie Mae and Freddie Mac in a bid to help reverse a prolonged housing and credit crisis. Immediately Wall Street posted a huge rally Monday as investors reacted with enthusiasm to the government’s actions. The Dow Jones Industrial average gained nearly 300 points in the day’s trading. So, what do you know about these mortgage giants?
Think of Fannie and Freddie as hybrids. They are both government sponsored and shareholder owned. They do not have direct contact with consumers; instead, they work with lenders. The job of Fannie and Freddie is to buy mortgages from banks, savings and loans, credit unions, and other lenders to ensure that mortgage funds are consistently available. Together, they hold or guarantee about $5 trillion in home loans which is nearly half of the country’s oustanding $12 trillion in home mortgage debt.
What spurred the governement bail out?
Steep home-price declines and a rise in mortgage delinquinces and foreclosures have badly hobbled Fannie and Freddie. The two firms have registered roughly $14 billion in losses over the past year. If they had failed, the damage to the mortgage and housing markets could have a catastrophic effect on the U.S. economy, as well as, the worldwide economy.
What’s happening locally?
Homebuyers in Orange County and surrounding areas of Southern California are encountering competition when writing offers on homes that are well priced in the marketplace. This competition has boosted sales with record home sales over the last 12 months posting in August. Property inventory is shrinking and buyers are finding out the hard way that a lot of the homes listed as available are in fact off the market and under contract as the homeowner awaits lender approval for their short sale. With rates dipping lower we will see a surge of buyers into the marketplace as this will lower monthly payments and therefore increase a buyer’s purchasing power. This series of events is making owning a home increasingly more attractive!
LAST WEEK:
30 year Fixed Rate:
6.5% (APR 6.540)
Monthly Payment:
$2,275.44*
TODAY:
30 year Fixed Rate:
5.5% (APR 5.537%)
Monthly Payment:
$2,044.04*
WHAT DOES THIS MEAN TO YOU?
Monthly Savings
$231.40!Annual Savings
$2,776.80!Price $450,000, 20% Down
*Interest rates based on full income and asset documentation, owner occupied residences. Payment does not include home owner’s insurance or property taxes. Loan approval is not gauranteed
and is subject to verication of specic information requested at time of application. Specic rates may not be available for all borrowers. Rates are subject to change.
Real Estate Broker, California Department of Real Estate #01050210
Monthly Payment $2,275.00
Ashlie DuCros
Direct: 714-743-9778
Ashlie.Ducros@mailpcr.com
www.ashlieducros.com
