San Diego real estate blog – Peter Toner

Government officials are being pushed to produce a plan to tackle the growing number of foreclosures and declining prices of homes across the nation.  Using Fannie Mae and Freddie Mac, the Treasury hopes to encourage banks to begin lending at rates that are as low as 4.5% for the standard 30-year-fixed mortgage. The hope for the lower rates is that it will encourage borrowers to go out and buy homes that require bigger loans and in doing so increasing demand as well as stabilizing if not slightly bringing back value to neighborhoods and help the “move up market” that is largely dormant.

To take advantage of the lower interest rate offers buyers would have to meet the requirements for a mortgage that is guaranteed by Fannie, Freddie or FHA –  to qualify for such loans borrowers must prove income and affordability, among other criteria; making these loans “less of a risk” to the government. The complete details have yet to be announced and it is not known whether or not Bush’s camp will be able to implement the plan prior to his term ending next month.