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.
Debate over loan limits won’t affect Houston
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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