What’s to Become of Fannie and Freddie?
This past weekend major changes occurred within the mortgage industry giants Fannie Mae and Freddie Mac. Formally government sponsored enterprise
s; the U.S. Department of Treasury will now act as their conservator.
What does this mean? Among other things the government will be reviewing the financial condition for both institutions on a quarterly basis as well as be able to pump money into them as needed. Sounds good right? With the big announcement came the request to both Fannie and Freddie’s CEO’s to take a bow and kindly leave.
Many fear that the changes will only put a band-aid on an issue that is more appropriately in need of a major face-lift. After hearing of the change, the California Association of Realtors (CAR) stated that loans from both Fannie and Freddie were the most often used and most reliable sources for home loans for Californians. CAR fears that having the U.S. Treasury as the conservator for these two institutions may in the long run negatively affect the housing market in California. CAR is urging those in Washington to ensure that the two entities continue to be able to fulfill their original missions. In contrast the U.S. Treasury hopes the restructuring will bring a bit of confidence and calming back to the market. As usual we will have to wait to see how the wave rides out.
Leave your response!