Can Fannie and Freddie Relieve the Housing Crisis?

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This is Mark Warner with propertymortgageinvestment.com and I wanted to comment on an article that recently appeared in the Bloomburg Businessweek from early August 2011.   It talks about how Fannie and Freddie can revive the housing market.   It also visits about the Obama administration hoping that the real estate market would recover on its own.

In here, they comment about homeowners that would benefit from a principal write down from Fannie and Freddie on the huge percentage of mortgages that they hold would have to give part of their property appreciation in the future back to cover for any reduction in their principal.

The second thing that they talked about is allowing for Fannie and Freddie to go ahead and sell off a bunch of their foreclosed properties and allow those companies who they sell those properties for to rent those properties thus freeing themselves from all of the toxic assets that they have on their balance sheets and allowing them to throw those into the rental market to keep rental costs from rising so significantly.    Better yet, with Obama’s jobs bill that now faces our congressional leaders and the $450 billion that he wants to spend it would be better to spend that $450 billion on shoring up the balance sheets of Fannie and Freddie in terms of giving the homeowners across the board a reduction on their interest rates on today’s interest rates and use that $450 billion to support the bond holders or the people who hold those securities that are reliant upon that interest.

One, the bond holders get the money that they need and that they’re living on.

Secondly, the homeowners that are living in those homes now have freed up billions of dollars that can now go back in as consumer purchases.  Those consumer purchases now prop up the economy, force more jobs that come back into the market place, the housing comes back because those people now are freed up to go ahead and purchase properties that now have a job and we lift the economy by supporting what initially threw a big wrench in the works.

If you’d like to comment on this, you can go to our facebook page under propertmortgageinvestment.com and comment about what you think about this idea of using that $450 billion to shore up Fannie and Freddie and more importantly the homeowners that now are paying the big bill of the mortgages they have.

This is Mark Warner with propertymortgageinvestment.com.

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