Will the Fed’s takeover of mortgage giants Fannie Mae and Freddie Mac help investors and home buyers?
Well, it might. The takeover is designed to shore up liquidity of the largest mortgage purchasers so that loan originators don’t get stuck with their newly originated loans.
In many cases, loan approval for qualified buyers was slow because loan originators did not give the final “go” on funding until they already had firm approval for the resale of the loan.
The fed’s intervention should take a lot of uncertainty out of the secondary mortgage market, and therefore lubricate the approval process for new loans. Another probable side effect will be lower interest rates on these loans.
Available financing for more buyers means that buying activity will go up, because at today’s prices buyers are motivated by affordability.
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1 response so far ↓
1 Foreclosure Research // Sep 15, 2008 at 6:45 am
It would be absolutely great if interest rates lowered on these loans. This country will finally see an increase in home purchases by year end.
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