Fannie Mae and Freddie Mac opened trading at record lows due to rumors about a possible bail out. I’m writing this waiting to hear an announcement from Treasury Secretary Paulsen….
If you are in a transaction at this time and your mortgage fits within the FHA loan limits ($567,500 for King, Pierce and Snohomish County), I recommend considering FHA as a back up plan. In fact, I’ve realized yesterday that all of my loans in process are currently FHA. ,
If you are considering buying or refinancing a home and are not yet in transaction, I highly recommend making sure that your Loan Originator is able to provide FHA financing. I recommend asking your Loan Officer (in writing-using email):
- Are they approved to provide FHA financing?
- How long has their company provided FHA financing?
- How long has the LO done FHA loans?
- Verify on HUD’s website that the mortgage company is indeed approved with HUD. This list will also show you how long a company has been approved by HUD.
What will the Fannie and Freddie look like after if the Gov steps in?
If you look at FHA, you know that HUD is very pro-homeownership. We may see low down programs like Flex 97 stick around–it’s very similar to FHA with the minimum 3% down.
Mortgage rates will probably increase dramatically since we will no longer have a private sector. It will all be government controlled.
I’m also wondering if the governement would utilize private mortgage insurance companies or if they will utilize something similar FHA’s mortgage insurance?
Stay tuned…this is not over.
Update 7:53 am: Here is Treasury Secretary Paulsen’s statement (from Market Watch):
Here is Paulsen’s statement (from Market Watch):
“Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission.
“We appreciate Congress’ important efforts to complete legislation that will help promote confidence in these companies. We are maintaining a dialogue with regulators and with the companies. OFHEO will continue to work with the companies as they take the steps necessary to allow them to continue to perform their important public mission.”
Update 2:51 p.m. I just received this Press Release from OFHEO (Office of Federal Housing Enterprise Oversight):
Statement of OFHEO Director James B. Lockhart
“I congratulate and thank Chairman Dodd, Ranking Member Shelby and the Senate for passing a sound and comprehensive GSE regulatory reform bill. This bill should help restore confidence in the housing markets by creating, on passage, a new, stronger regulator with all the necessary tools to oversee Fannie Mae, Freddie Mac and the Federal Home Loan Banks. I am hopeful the House will act quickly and the bill will soon be enacted into law.
With this very turbulent market it is important to strengthen the regulator of Fannie Mae and Freddie Mac and combine it with the regulator of the Federal Home Loan Banks as soon as possible as all of the GSEs are being asked to do more and more to support the mortgage market.”