Posted by: Larry Stevens | July 14, 2011

Boise REALTOR Blog: Ousting Freddie and Fannie

Just four years after home values across the country went into a nose dive the fears regarding the housing market have not disappeared. In a testimony before congress Federal Reserve Chairman Ben Bernanke stated that the continuing depressed condition of the housing sector is one of the key factors behind Americas sagging economy.

It is in response to this poor market that the White House is rumored to be reconsidering the bad decisions that contributed to the mortgage meltdown rather than looking to cut out a major cause for it by eliminating Fannie Mae and Freddie Mac.

President Obama has remarked that the “continuing decline in the housing market is something that hasn’t bottomed out as quickly as we expected.” It seems that in hopes to find a solution the White House may be suggesting that taxpayer-owned mortgage giants Fannie Mae and Freddie Mac relax their rules for loans to investors as one way to tackle the slump in housing.

Been there, done that, bought the tshirt, and all we got was this lousy economy.
In case you don’t recall this has already been tried when Freddie, Fannie, and the government aimed to make it easier for people to purchase homes and set off the deadly spiral we’re facing now. In the years since housing prices peaked in 2007 the value of household real estate has fallen by nearly six trillion dollars – and continues to keep falling.

While some in the urban development sector are trying to take a positive view of the marketing, saying it’s “unlikely that we will see a significant further decline”, those in the know have a little more fact based view of how far of a row real estate has yet to hoe. The Dow took 35 years to return to pre-crash levels; the housing decline will very likewise be a long multiyear process with the effects being wide felt across the economy as a whole.

So how do we fix this?
Experts say that real recovery is not likely to happen until Fannie Mae and Freddie Max are replaced by a new housing finance system that does not include government man-handling of the market. Although the two entities started out well things changed as Congress used their special status as government-sponsored enterprises in order to require them to meet affordable housing goals by issuing mortgages to lower-income homeowners. Those policies combined with Fannie and Freddie’s involvement in investing and mortgage backed securities, the housing market collapse, and other governmental factors all lead to a huge housing fallout.

The first step to fixing these massive issues is not to repeat what caused them in the first place. By allowing these entities to remain operating as they are in place now will only further the problems. Instead legislators and the Obama administration need to work to restructure the mortgage-finance system to insure more flexibility in order to meet the needs of the market while still meeting strict underwriting standards in order to protect consumers from predatory lending practices.

While the economy is bad and the markets are in turmoil, it is still a great time to buy a home for first time home buyers in Idaho. Prices and rates are still only getting better at this point and real estate is still one of the best markets to invest in regardless of other factors. As your Idaho REALTOR I always have your best interests in mind, and helping you understand the market and how it can effect you is just one of the services I provide.

If you are looking for  homes in the greater Boise area contact me today – I can help you avoid potential pitfalls and find you the best deals on the homes you want!

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