How Fannie Mae/Freddie Mac Affects You - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

How Fannie Mae/Freddie Mac Affects You

Justin Smith, First Time Home Buyer Justin Smith, First Time Home Buyer
Gary Paray, Century 21 Boston & Co. Gary Paray, Century 21 Boston & Co.
Bill Hall, Edward Jones Investments Bill Hall, Edward Jones Investments

More than three quarters of home mortgages in the United States are owned by Freddie Mac and Fannie Mae.

The government takeover has one immediate benefit... Interest rates are already dropping. One Amarillo man we spoke with is already taking full advantage of the lower rates. "It's really hard to find a cheap house." Luckily for first time home buyer Justin Smith, looks like there's a light at the end of the tunnel. "My mortgage rate started out as 6.5%. That's the interest rate. And I went in to sign the papers [my real estate agent] surprised me and said did you want to lock it in at 6%."

He's not the only one reaping the benefits of the takeover... Now that Uncle Sam owns Freddie Mac and Fannie Mae, they are taking drastic steps to encourage movement on the real estate front. The government is now responsible for quite a few mortgages... Five trillion dollars worth. But that's not all. Bill Hall at Edward Jones Investments says "We've got two and a half years of inventory again sitting there that's gotta be worked through."They're hoping lowering the interest rate will attract more buyers and bolster the economy.

Gary Paray is a broker and owner at Century 21 Boston & Co. He says "It makes it a lot easier. A lot easier to find a house for the buyer and it also makes it a lot easier for the sellers to find buyers that qualify for their house. "The treasury department has a lot of money invested in Fannie and Freddie... A cost that could be passed on to you... Eventually.

Hall says "They've committed up to loan a hundred billion dollars to each of these entities to keep them from going under. That number may be 50 billion. It may be 200 billion. No one knows the end result." Once that cost is determined, it could be passed on to consumers through real estate taxes... But it won't happen tomorrow. "We'll have to wait five to ten years would be my guess." The government takeover of the two companies is being called the biggest financial takeover in US history.

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