What does the Fannie/Freddie takeover mean and what’s the context?

If you’re having trouble understanding the implications of the government’s intervention on GSEs Fannie Mae and Freddie Mac, or if you need a little help explaining it to your clients, this 150-second video from the California Association of REALTORS® featuring Joel Singer, their Executive Vice President, might be helpful to you:

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3 Responses to What does the Fannie/Freddie takeover mean and what’s the context?

  1. Vonda Lacey says:

    I am disappointed with the lack of information I am able to find on the Fannie/Freddie bailout in the news & online. Below is an article that I have written for the Staunton Daily Newsleader for Sunday’s publication.

    Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt’s New Deal to promote confidence in the housing market following the Great Depression. Fannie Mae & Freddie Mac are paying the price for the current housing crunch because they have taken on additional loans to ease the burden of the foreclosure crisis. Subprime lending, which was NOT Fannie & Freddie products, are the brunt of our current mortgage/financial/housing crisis. Along with taking on other’s debt to keep the housing market afloat, problems within the operations of Fannie & Freddie themselves have surfaced. Therefore, the government had to step in. Either way the taxpayer was going to pay for the problem. The government could let Fannie & Freddie crash which would result in the stock market crashing and most likely sending our country into a depression, who knows what the effect would have been globally. But with the bailout, the taxpayer could still pay if the plans put into place with the bailout fail or are not managed properly. That will be up to the next President and Congress to see that it is handled correctly.
    What does this bailout mean for you, the consumer? It is actually GOOD for YOU if it works as planned. The stock market has already benefited with a rise and it is projected by analyst to continue. It has also caused mortgage rates to drop nearly a percentage point for conventional loans and nearly a half percentage point for FHA & VA loans since last week! (Some analysts predict lower interest rates will not last long.) The goal is to build consumer confidence and hopefully consumers will take advantage of these products which will stimulate the economy. With the declining home prices beginning to show signs of stabilizing and with the lower interest rates in sight and on the horizon this is very good news for the housing market. As I have said in the past, a “boom” is not on the horizon, but the housing market will slowly become stronger and stabilize. If the consumer takes advantage of refinancing their current subprime, adjustable rate, and other high cost loans instead of opting for foreclosure the burden on the taxpayer is reduced even more. The government alone cannot save us, we need to be proactive and seek help to resolve our personal financial crisis as well!

  2. michael paul says:

    Thanks Ben, that was a helpful video…but who was the gentleman speaking? I’m not doubting what he is saying, it just might be handy to know who he is.

  3. Ki says:

    I agree with Vonda. I think in the end taxpayers were going to pay either way. If we let Fannie and Freddie fail we would pay with economic turmoil.

    The only problem I see now is that since Lehman is failing it looking like that is going to nullify some of the benefits of the Fannie Mae and Freddie Mac takeover.

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