Vashon Homes & Events from Go! Real Estate

Vashon Real Estate: Help for Freddie Mac and Fannie Mae

November 20, 2008 at 1:33 am Leave a comment

On November 7, Federal officials announced a plan to rework threatened home loans owned or guaranteed by mortgage giants Freddie Mac and Fannie Mae.  The move was intended to stop the downward spiral in the housing market.  The program is scheduled to start December 15, and is open to borrowers who have missed at least three payments, have loans for at least 90 % of the home’s value, live in the home as a primary residence, and have not filed for bankruptcy.  The plan will reduce payments to no more than 38% of a household’s gross income by reducingthe interest rate, extending the life of the loan, deferring payment on part of the principal, and customized steps, if needed.

Critics say that the program does not go far enough.  Evidently Wall Street agrees, with the market on a roller coaster demonstrating that the news does not have a stabilizing effect on the economy.

One wonders whether the Fed actually has a handle on the crisis, or will continue to throw good money after bad as the economy spirals. Forecasts for the retail economy during the critically important holiday season are dismal, with fear of further downturns, particularly in the employment sector, causing many consumers to cut back on purchases.  The news out of Detroit, as automakers plead to have their own bailout program after years of mismanagement, intensifies the impression that stability is a long way away.  President-elect Obama is said to be sympathetic to the automakers’ pleas, which may mean that the next Administration may continue to throw money (to be paid for by our children’s children’s taxes) at the problem. 

To make matters worse, the Bush Administration has urgently shifted course in its initial bailout proposal after only a few weeks of testing the plan.  Treasury Secretary Henry Paulson announced that the program would not, as originally announced, fund the purchase of distressed mortgage-backed securities and other troubled assets on the books of banks,ensruing that the housing market would continue to dangle iun the wind.  The Administration is casting about to find new ways to shore up banks, credit cards, auto loans, and other huge NON-BANK businesses.  Wall Street, predictably, tanked upon hearing the news. Projecting an image of no-confidence in its own hastily conceived plan, the Administration is making matters grave.

This writer urges the Congress and the Administration to abandon its high spending un-regulated aid to a few monolithic institutions and to channel funds to local banks to enable local lending at a grass-roots level.  The notion that trickle-down economics will work to aid Main Street Americans has been disproved and renounced by Alan Greenspan.  The centralization of economic power at the expense of the vast majority of the country is an indirect method to aid the people of this country.

This writer can only hope that President-elect Obama proves to have the integrity to see through the status quo in Washington, D.C., and Wall Street, and turn the power of government toward the welfare of the people.

Entry filed under: • Real Estate, Housing Market News. Tags: Seattle Fannie Mae, Seattle Freddie Mac, Seattle home finance, Seattle mortgage news, Seattle real estate, Vashon Fannie Mae, Vashon Freddie Mac, Vashon home finance, Vashon mortgage news, Vashon real estate.