Washington Report: Treasury Policy Change - The Obama administration announced a blockbuster policy change over the holidays that didn't get a lot of press attention, but will affect the housing market for years. The Treasury department said it is now committed to support Fannie Mae and Freddie Mac with as many billions of dollars as is necessary to get them through the next three years. The significance of the move for real estate is potentially huge, for several reasons: 1) Fannie and Freddie provide funding for well over half the U.S. mortgage market - making home sales and purchases possible for hundreds of thousands of consumers; 2) The fact that the two companies have an explicit, full faith and credit backstop from the U.S. Treasury means that Fannie and Freddie can borrow in the capital markets at more favorable rates. Those lower costs of capital can then be passed along - at least in part - to home loan borrowers in the form of lower interest rates; 3) Finally, a key reason for the policy change is to help Fannie and Freddie provide deeper loan modification assistance to greater numbers of seriously troubled borrowers.
Michael Pittman
Keller Williams Sonoran Living
Realtor®
602-622-2776 Main
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