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The Fed Rescues Fannie Mae and Freddie Mac – Good for You?

September 8, 2008

You may have heard that the Fed is making some commitments to supporting Fannie Mae and Freddie Mac. You may also have noticed that the stock market rallied a bit this morning and is responding positively to this news.

In brief the federal government has seized control of the mortgage giants and is restructuring them to ensure fiscal stability. They are infusing the companies with $200 billion and replacing the CEO’s as part of this very dramatic rescue. You can read more about it here:, in the Wall Street Journal, although every news company has its own report.

Why? And how will this help you? In the short run, the stock market is responding favorably and has rallied in trading following the weekend announcement. In the long run, the increased liquidity should produce a reduction in rates, and because shareholders will no longer have to be appeased, there will be fewer restrictions on who can qualify, thus helping more consumers get loans. We won’t be going back to the days where anyone could get a 100% mortgage. I hope we’ve learned that is not a sensible approach! But this is good news, indeed. For, when the housing market is strong, the economy is not far behind and everyone benefits.

Patty Cunningham, ePro, SRES, ABR, AHS
Coldwell Banker Preferred
office: 610-363-6006
direct: 484-881-6051
cell: 610-659-4669

Oh, by the way… I’m never too busy for one of your referrals!


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