WHAT LESS GOVERNMENT INTERVENTION IN THE MORTGAGE MARKET WILL MEAN TO YOU

WHAT LESS GOVERNMENT INTERVENTION IN THE MORTGAGE MARKET WILL MEAN TO YOU

In the continuing effort to reduce government spending and get the country back on an even fiscal keel the Obama administration is discussing the reduction of Fannie Mae and Freddie Mac, or their elimination all together; turning most of the mortgage market over to the private sector.

These two government-controlled giants purchase the vast majority of mortgages on the secondary market.  Lenders usually adhere to Fannie Mae and Freddie Mac guidelines to ensure the marketability of the loans made.  So, when Fannie Mae and Freddie Mac speak, EVERYBODY listens.  What will happen as that influence fades away and the private sector fills the rather large void?

Borrower costs go up.  Loan servicers will yield to investor pressure, increasing the portion of the purchase cost that a borrower must bring to the table.  Ten percent to twenty-five percent down payments will become the norm.  Other fees and charges will be added to the loan acquisition costs.  Credit Suisse, one of the two largest banks in the world, estimates that interest rates themselves could increase by as much as 2%!   Even if they do not jump that much the impact on the housing market will be catastrophic.

Select this link for more details:

http://www.realtor.org/rmodaily.nsf/f3c66d0c6457c1e1862570af000cb13b/72ffcb0c5a0603ce8625783700570a76?OpenDocument

Obviously, NOW is the time to buy and get your loan approved and funded.  In a year or two it is going to be MUCH more difficult to qualify and costs are going to be higher.