Courtesy of Alan Greer 
Bank of America
Mortgage Loan Officer
Ph  (843) 285-3031 


Last Week

 

The Labor Department reported Friday, August 5th, payrolls shrank by 84,000 last month, more than the 75,000 –economists predicted, and higher than the 51,000 jobs lost in July. The nation’s unemployment rate rose to 6.1 percent from 5.7 percent.

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This Week

 

Treasury Secretary Henry Paulson said Congress should view the next few months as a "time out" in the highly charged debate over what to do with mortgage giants Fannie Mae and Freddie Mac.

But lawmakers already are sketching plans for what the two troubled government-sponsored companies should look like in the future -- from taking them private, to nationalizing them or turning them into a public utility, to letting them continue to operate as private entities with government backing.

It's up to a new president and a new Congress to decide what happens next.

The Bush administration announced Sunday it was seizing the two huge mortgage companies, which together own or guarantee about $5 trillion in home loans, about half the nation's total, in a bid to help reverse a prolonged housing and credit crisis. They're being placed in a government conservatorship, a move that could end up costing taxpayers billions of dollars.

Paulson has acknowledges there's no way Congress can decide what to do with Fannie Mae and Freddie Mac before the end of the year, but he also said policy makers would make "a grave error if we don't use this time out to permanently address the structural issues" they pose.

Fannie Mae and Freddie Mac, which are private companies that were chartered by Congress, serve a vital role of providing cash flow to mortgage markets by buying up loans from banks. Their pseudo-governmental status confers lucrative benefits, exempting them from some taxes, letting them hold less capital than required of banks, and -- most significantly -- allowing them to borrow at rates much cheaper than other companies because investors believe that the government will never let them falter.

The result of Sunday’s actions pushed mortgage rates down on Monday, September 8th. 

Coming Up

 

  • The Federal Reserve meets again on September 16th. Will they raise rates or not?
  • FHA will eliminate seller funded down payment assistance on October 1st. 
  • FHA will increase its MIP premium charged to homebuyers from 1.5% to 1.75% for the upfront premium October 1st.