Real Estate Market Happenings

Now that the media sensationalism concerning Fannie Mae and Freddie Mac finally hit the front page, how is this going to affect buyers and sellers?

First off, the Federal Reserve (Ben Bernanke) and Treasury Department (Henry Paulson) will never let Fannie Mae and Freddie Mac "go under." That's not going to happen...period! The real story is what's going to be done and how much is it going to cost (us, the taxpayers)?

In my humble opinion, $5 trillion of mortgages held is way too much for these two organizations to handle. That's too much risk and it's what got us into this mess anyhow. Second, these two companies need an indepent overseer and not something "dreamed up" by Congress (conflict of interest). Third, mortgage qualifying and lending standards need to be "tightened" much more than they have been in past three years. Yes, it's nice to be able to own your own home and not rent, but life's not fair and not everyone gets this privledge. Sorry! Fourth, mortgage lenders and mortgage brokers who didn't provide full disclosure on the loans they were "selling" to buyers should face criminal prosecution and be sent to prison if found guilty. Fifth, mortgage lenders and brokers who have been found guilty should not be able to open a mortgage company or work in the mortgage lending industry again.

Impact on buyers: Many lenders now require buyers to put 20% down on their purchase. If buyers don't have the money, they can hope to find a seller willing to finance (up to 15%) so buyers can put 5% down. Buyers need to have good credit history and scores also.

Impact on sellers: Hope you have buyers with good credit scores and enough money for 20% down and able to qualify for an 80% mortgage. The backup position is to be willing to provide financing (which has its own risks).

Don't expect this mess to go away anytime soon. It's taken us 20 years or so to get here and it'll take at least two or three years before "things" settle down and maybe start to improve.