Fannie & Freddie Get Unconditional Federal Support
David J Edwards
financial support to Fannie Mae and Freddie Mac. This will expire in
2012, after which the firms will have approximately $290 billion
allocated to them.
-September 2008: Bush administration took over Fannie Mae and Freddie
Mac at the height of the financial crisis and promised $200 billion to
keep them afloat.
- Earlier in 2009: Obama doubled the $200 billion to $400 billion.
- December 24, 2009: The president announces the government will
provide unconditional financial support to Fannie Mae and Freddie Mac
for 2010-2012.
- December 29, 2009: Analysts predict that Fannie and Freddie will
begin purchasing delinquent loans.
These two institutions play an integral role in both the housing and
lending industries. When a bank makes a conventional mortgage loan, it
will then sell that loan to Fannie Mae or Freddie Mac. This frees up
the bank to then make more loans and repeat the process.
When Fannie and Freddie stop buying mortgages from the banks, mortgage
credit freezes, banks stop lending, and houses can’t sell. Such was
the case last year at the height of the credit crisis. Confidence in
these firms is a key component to the flow of credit and this
unconditional financial support intends to bolster that confidence.
Despite the short-term unconditional federal support, experts say it
is critical for the real estate industry, the lending industry, and
the economy that these companies keep their long-term vitality in mind
over the next three years.
Source - The Washington Post
Best Regards,
David J Edwards
Real Estate Agent & REALTOR
Edwards Real Estate Group
Keller Williams Realty Southeast Sound
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