Hackney's Houses

This came from a lender friend of mine yesterday after the announcement of the government bail out of Fannie Mae and Freddie Mac.  The news continues to paint a picture of doom and gloom when in reality every change creates opportunity for those who will step forward.

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So, it happened…Fannie Mae and Freddie Mac have been bailed out by us, the US Government. Reading all that I have and listening to Secretary Paulson, this is a hopeful move with no guarantees. As much as I hate to see us bail-out a private company, it was vital to holding together the current mortgage industry. Without the takeover and infusion of money I would not be doing much today, as Fannie and Freddie would have gone bankrupt. This would be OK, if it was just going to affect me, but it would have caused the housing industry to tank. A little background to the story, the agency was created to give liquidity to the housing market after the 1930’s housing crash and then privatized in 1968. While owned by its shareholders, Fannie has been regulated by a government agency and been able to borrow money cheaply, thanks to the implicit guarantee by the US Government. It uses those funds to buy and securitize home loans- up to 55% of currently written home loans (I have even heard up to 70%). Secretary Paulson has said this morning that the hope to stabilize the losses is out until 2010 and I think this is conservative. The Alt-A loans (Stated, No Doc, 100%) where still moving into 2008. Many people are still holding on and it is becoming harder and harder for them to do so. They will continue to be forced into walking away from their properties. The future is unknown and will be dependent on many factors. Will investors feel comfortable and safe enough to invest in the Fannie and Freddie? Will there be a turn around that could reap rewards for the US Government and payback this debt?

The good news is right now. Buy, buy, buy! The mortgage bond markets are soaring right now and rates are dropping in response. This may or may not continue. I have heard that one way to increase the stability to the agencies is to raise rates. There are great properties to choose from, people who must sell and great agents ready to work hard for seller and buyers! Rates today are as low as 5.625% with a cost of 1pt or 5.74% APR.

Have a wonderful day and a great week!

Nicole

Nicole Walker

510-LO-30931

phone 360.594.4455

fax 360.676.0686