Federal Government Bails Out Mortgage Giants

September 9th, 2008 by Jake

The federal government announced an ambitious plan to bail out two ailing mortgage giants. Fannie Mae and Freddie Mac have been hard hit by the recent downturn in the market and skyrocketing foreclosures across the nation. The bailout intends to inject the market with much-needed confidence.

However, what does all of this mean for us? The first area where homeowners and buyers will feel the effect could be in declining mortgage rates. Successive cuts in the interest rate by the Fed has done little to bring down mortgage rates, but the bailout of Freddie Mac and Fannie Mae could change that. This could mean that more buyers will be able to afford homes around the nation.

Distressed homeowners could stand to benefit as well. Lower interest rates could lead to a more favorable refinancing, lowering monthly payments and helping to keep foreclosures down.

Home prices could also be in for a shot in the arm. As fewer homes, particularly foreclosed homes, come on the market, there will be fewer options for buyers, leaving them at a disadvantage when it comes time to negotiate the final price. The news could be a positive development for the North Shore Chicago Real Estate market.

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