This past weekend, the U.S. Department of Treasury placed Fannie Mae and Freddie Mac -- Government Sponsored Enterprises (GSEs) – into a government conservatorship, taking over day-to-day management of the two agencies.
 
The GSEs are critical to the overall housing market and more specifically, the mortgage industry. Together, they own or guarantee approximately $5.2 trillion in mortgage loans – about half of the nation’s total. Their role is critical to the housing industry.
 
Fannie and Freddie also play a significant role in the investor community since many individuals, companies and foreign investors own mortgage back securities issued by the GSEs. Government backing restores confidence and ensures that global financial markets will continue to provide market liquidity, which could expedite stabilization in the credit and housing markets.
 
SO WHAT DOES THIS MEAN FOR A HOME OWNER OR A HOME BUYER?
 
Many experts believe this takeover will lead to lower mortgage rates … Great news for homebuyers, sellers and those hoping to refinance. A Fannie Mae or Freddie Mac loan will now be guaranteed by the U.S. Government. This removes the risk of default and takes away the need to increase rates to offset risk.
 
Lower rates will not only attract more homebuyers into the market but will also help to stabilize home prices.
 
Now is the time to move forward with your plans to sell and/or purchase a new home. Make sure that you are in contact with your realtor to make sure that you have your current home ready to move quickly and are aware of new homes coming on the market. Also, remember your loan officer so that you are kept up to date on how rates are moving day to day.
 
These are exciting times!
Heather A Larson
Loan Officer
Chase Home Finance