Effects of government’s mortgage overhaul to start early

The winding down of Fannie Mae and Freddie Mac will make a big impact in the next few months.While lawmakers in Washington are working to wind down Fannie Mae and Freddie Mac over the next five or seven years, real estate experts say the impact from those decisions will be felt well before those changes become final.

Mortgage experts told the New York Times (http://www NULL.nytimes NULL.com/2011/03/06/realestate/mortgages/06Mortgage-fannie-freddie NULL.html) that those looking to buy a home could see higher mortgage costs even within the next year. That's because while some parts of the plan require approval from Congress, others don't, and could be in place quickly.

"There's a lot of uncertainty in the process," Barry Zigas, the director of housing policy at the Consumer Federation of America, told the paper. "but you're probably going to get a better deal on a fixed-rate loan sooner rather than later."

Other analysts said that in the coming months, banks may try to promote adjustable-rate loans instead of fixed-rate mortgages, because they generally bring in more money.

However, that would not be the preferred choice of most people looking at Houston homes. A survey last year by Fannie Mae found that borrowers with fixed-rate loans were more satisfied than those with other mortgage types.

Debate over loan limits won’t affect Houston

Part of the mortgage debate in Washington won't have any effect in Houston.As lawmakers in Washington, D.C. debate the future of Fannie Mae and Freddie Mac, some of the discussion has focused on the reduction of loan limits for government-backed loans. However, those changes won't affect the Houston real estate market.

In 2008, officials raised the maximum loan value for mortgages that could be guaranteed by Fannie Mae and Freddie Mac from the standard $417,000 to as high as $729,750 in some high-priced areas, like New York City, in essence making it easier to buy homes in those cities.

A number of sources have said that lawmakers will likely let the higher limits expire as planned in September, instead of extending them like they did in 2010, when the economy was less stable. That will make mortgages for higher-end homes more expensive in some parts of the country.

But for Houston homes, those higher loan limits didn't apply, because officials said that Houston homes were affordable enough that they didn't need the extra government support. In fact, no cities in Texas qualified for an elevated limit.

Other studies have also shown the affordability of Houston homes. A recent study by Demographia found that local properties were the 15th-most affordable of any U.S. city with more than 1 million people.

Senate passes Bailout – Making Sense of it All

The Senate passed the 700 Billion dollar Bailout of Freddie Mac and Fannie Mae today.  I am curious if everyone out there knows what these companies do and why the Government stepped in to help out.

First, to help clear some of the confusion, these two companies are mortgage guarantors.  Fannie Mae was created back in the Great Depression by Roosevelt’s administration to back loans by private banks in order to make homeownership more assesible.  Years later the government allowed Fannie Mae to be privately managed. Freddie Mac was created by the government to keep Fannie Mae from becoming to big.

Fannie Mae and Freddie Mac guarantee more than $5 trillion in mortgages, almost half of those in the United States, With many of the mortgages defaulting, the companies are, in effect, bankrupt.  These two companies are such a large part of our financial system that failure of one or both would be detrimental Nationally and Globally.

This takeover was put in place to protect us, the taxpayer. How, well the U.S. government will be creating more demand in the marketplace by buying Fannie and Freddie mortgage bonds, homeowners and buyers should start seeing lower mortgage rates.  This may become one of the best times to purchase or refinance your home.

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