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Fannie and Freddie – question mark?

Hello Bloggers – THANK you for stopping by today. It seems that each time we get a moment to breathe in my industry – WHAM, another dramatic headline is there to make the residential real estate market “nervous”. Local Raleigh real estate and Cary real estate are NOT in the “tank” as the national head lines would have us believe. Truthfully, our team’s July numbers are better than 2007 – so for us the market has bottomed out and beginning to rise.

I do want to address Fannie Mae and Freddie Mac headlines. The best way to accomplish this is to get the facts from someone I trust in the banking/mortgage field. That’s exactly what I am going to do. Below, Michael Martin gives a short explanation follow by a link that goes into depth. Here is a word from Michael Martin of Starkey Mortgage.

Regarding Fannie Mae and Freddie Mac: Naturally, a lot of people are wondering
what this may mean to them in regards to a purchase loan or the possibility of
refinancing their home. There is very detailed information listed in the link
below and if you are able to take the time to read it I am sure it will help you
understand what is happening. Here is a brief overview though…

week it was brought to Fannie Mae and Freddie Mac’s attention that they needed
to change some accounting procedures to “correct” their books to accurately
report the losses that they are facing. It was then reported on Wednesday that
if Fannie and Freddie were to change the books to the more accurate accounting
method that they would be “insolvent” which is obviously not good. The reality
is and has been that the companies have enough liquidity to remain in business
and that they are also able to raise capital if necessary to continue to remain
in business. On Friday, the Federal Reserve announced that they would open the
Discount Window to Fannie Mae and Freddie Mac if it would become necessary. The
“Discount Window” is basically like a line of credit with the Federal Reserve.
The reality is that this provided a safety feature to investors that will help
many people feel more comfortable in continuing to invest in these companies.
Fannie and Freddie may never actually need to borrow from this window but it is
nice for investors to know it is there in case of emergency.

The real
deal is that the government cannot allow for either of these quasi governmental
companies to cease. They are far too important to our overall economy and it has
been good for everyone to see that the Government has been able to step in to
provide security. If you have any questions at all please feel free to email or
call me with any questions. I certainly don’t have all the answers but I have
access to most of them. We are continuing to move through the tough times and
once we have arrived at the other side of these murky waters, we’ll all be glad
we’ve studed the market carefully and continued to believe in the value and
strengh of the American Home.


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