US government takes on big role in mortgage market
Sep 8, 7:08 AM (ET)
By MARTIN CRUTSINGER and ALAN ZIBEL
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WASHINGTON (AP) – Uncle Sam has just become the 800 pound gorilla in the U.S. mortgage market. The Bush administration’s announced Sunday it was seizing troubled mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) in a bid to help reverse a prolonged housing and credit crisis.
But private analysts worried that it may not be enough to stabilize the slumping housing market given the glut of vacant homes for sale, rising foreclosures, rising unemployment and weak consumer confidence.
Mark Zandi, chief economist at Moody’s Economy.com predicted that 30-year mortgage rates, currently averaging 6.35 percent nationwide, could dip to close to 5.5 percent. That’s because investors will be more willing to buy the debt issued by Fannie and Freddie – and at lower rates – since the federal government is now explicitly standing behind that debt.
“Effectively, the federal government has now become the nation’s mortgage lender,” he said. “This takes a major financial threat off the table.”
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Another step towards socialism. What about all the big bonuses that were paid out to the bozo management? Can anyone in DC spell ‘moral hazard’? Aggh!
Taxpayers should be outraged. Where does the 200B$ come from? Yup, you sheeple.
We better demand that they get out of the mortgage business immediately.
Where are the legislators that created this “public private partnership”? Yeah, retired drawing big fat gooferment pensions. And we are left holding the bag!
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