MSU Law Faculty in the News
Government take over of Fannie and Freddie
Sep 8, 2008
WLNS
By Mona Shand
The country's two largest mortgage lenders are in the hands of the federal government. Uncle Sam took over Fannie Mae and Freddie Mac this weekend in a massive bailout.
The two ailing mortgage giants either own or guarantee about half the nation's home loans, and some feared they were on the verge of a collapse that could take down the whole US economy.
Homes for sale line Mid-Michigan's streets that much hasn't changed. It's what happens behind those signs, that has.
The government seized the nation's mortgage giants to keep money flowing to lenders and prop up the housing market. Let's say you're in the market to buy a home. Experts say the move could be good news for you, because it makes mortgage money available, at better interest rates.
Prof. Elliot Spoon, MSU College of Law: "It's absolutely a move to reassure investors, who will then continue to put money in the mortgage market. And the more investors in the mortgage market, the more likely it is that rates will stay at low levels."
And if you're struggling to hold onto your home, this could be good news for you, too, Because the government bailout makes more refinancing options available, so fewer homes will go be forced to go into foreclosure
Prof. Elliot Spoon:"What the government did is not a quick fix to the overall housing problem. It really attempts to fix one aspect of the housing problem, and that is the availability of mortgage money."
...a big step from the government to turn foreclosed and for sale into signs that read sold.