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Fannie Mae
and Freddie Mac
Fannie
Mae and Freddie Mac are the
agencies responsible for buying
mortgages from the nation’s
lenders. Bailed out from the
government and getting an
additional $500B in bond
purchases by the government.
These quasi government agencies
are only helping some of the
markets.
Fannie
Mae and Freddie Mac only help’s
those in need of mortgages up to
$417k and up to 625k in some
areas of the country. Since
august of 2007, the credit
markets responsible for buying
mortgage backed securities made
up of jumbo mortgages, typically
over $417,000, have all but
disappeared.
This has
made it very difficult for those
in need of mortgages of this
type. Now that the government is
a partner in FANNIE & FREDDIE,
they should instruct these
agencies to raise the mortgage
limit to $1.5mm, for regions
with middle to high income.
Current
regulations prohibit banks and
lenders from “red lining’.
Redlining refers to
discrimination against those in
low to moderate income areas.
Now the redlining rule is being
broken by the government and is
discriminating against those
living in middle to higher
income areas.
Raising
loan limits to at least $1.5mm
will draw financial institutions
back into investing in these
assets again. Hence, the global
credit markets will begin to
function more normally.
