Tag Archives: mortgages

Feds Want to See More Fannie Mae and Freddie Mac Help in US Housing Market

Economy, , , , , ,
Fannie Mae

The Federal Reserve Board told Congress this week that Fannie Mae and Freddie Mac, both government-run mortgage finance companies, could be instrumental in helping to get the wallowing US housing market back on track.

Not All Agree

The proposal to use the government mortgage companies to improve the housing situation  threatens to run into hurdles from politicians opposed to the idea.

The Federal Reserve sent a paper to the legislators on Wednesday describing concrete steps which the government can take to help jump-start the lackadaisical housing market, including letting Fannie and Freddie provide affordable mortgages to a larger number of potential homeowners.

Freddie and Fannie Problematic

It is not so simple, however. The two mortgage companies were seized by the government over three years ago as they were about to fall apart despite the fact that they are the biggest sources of US mortgage funding. Since then they have been held together with $169 billion in taxpayer money, making them an easy target of lawmakers on the Hill.

Obama Not So Sure

Even the Obama administration has expressed a desire to reduce the role the government plays in housing finance. Such a reduction was part of a three-pronged program to reform the US finance system that Obama’s administration laid out last year.

“It comes at a time that Congress has become quite skeptical of Fannie and Freddie and their role, and seems to be looking for ways to diminish their long-run role in housing finance, not increase it,” said David Resler, chief economic adviser at Nomura Securities International.

Consumer Debt Down Says Federal Reserve

Economy, , ,

In what bodes well for US households and the economy, the US Federal Reserve revealed that total household debt for Americans is slowly heading south, a positive sign that debt holders are managing to reduce the debt they incurred during the boom years of the US economy.

Long Road Ahead

There is still, however, a long way to go. Hope can be found in the fact that consumers lowered their overall debt by $40 billion in the third quarter of 2011, but there is still a long road ahead as the debt still pending totals over $13 trillion dollars, still reminding us of the good old days when US consumers went on a collective borrowing binge. Where is the money still owed? Everywhere- from credit cards to car loans to mortgages.

Mortgages Reach Five-Year Low

Look at the bright side: the debt is going down, slowly but surely. Mortgages have shown the best improvement, reaching a five-year low during 2011’s third quarter. There are several factors pushing down mortgage debt, say the experts, including foreclosures, bankruptcies and a less than vigorous demand for houses. Banks are also lending a hand: burned from the subprime fire, the banks are hesitant, to say the least, to lend out their hard-earned dollars, creating a low-flow situation of mortgage credit.

“The process is still ongoing,” says Greg Daco, economist at IHS Global Insight. “The decline in home prices has reduced movement and activity in the housing market both on the selling side and on the buying side. People don’t want to sell because they’re waiting for prices to stabilize or go up, and people don’t want to buy because they’re waiting for prices to continue to fall.”