You may recall that back in September ’08 the federal government essentially nationalized the mortgage buying giants and backing them with $200 billion in guarantees against losses.
Two days ago, on Christmas Eve, they got another federal gift: a removal of the caps to fund losses at Fannie Mae and Freddie Mac. Now, they are no longer limited to $200 billion each. They are unlimited. In exchange, the government gets 80% of the stock in each company paying 10% dividends.
Is this good or bad for the housing industry? Well, it means the government is fully committed to doing all it takes to help the housing market turn and lead us out of recession. That’s good. It also indicates that all parties involved expect the losses to exceed the $200b limit and want to prepare for it now rather than wait for a crisis time. That’s bad.
But for now, for the prospective home buyer around Atlanta, the same thing applies: that now is the best time to buy due to the $8000 tax credit, and the low, subsidized mortgage interest rates that, according to the current plan, will rise sharply in April, 2010.
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