TBO.com - TBO is Tampa Bay Online

Homebuyers Yet To See Perks From Fannie, Freddie Takeover

ADVERTISEMENT

The Associated Press

The Tampa Tribune

Published: September 26, 2008

WASHINGTON - Consumers shopping for a loan have yet to see much benefit from the government takeover of Fannie Mae and Freddie Mac almost three weeks ago, but the new chief executive officers of the mortgage finance companies planned to tell lawmakers Thursday that they are working to stabilize the housing market.

Mortgage rates dipped after the government put Fannie and Freddie under conservatorship Sept. 7, but spiked this week.

The average interest rate for a 30-year, fixed-rate loan this week is 6.09 percent, up from 5.78 percent last week, Freddie Mac said Thursday. That increase boosts the payment on a $200,000 loan, for example, by about $40 a month.

"We have not seen any mortgage program changes, no assistance for clients to make anything different," said Jodi York-Caraballo, owner of Green Valley Mortgage Inc. in Bloomingdale, Ill. "They haven't eased up on lending restrictions."

Still, Fannie Mae's new CEO, Herbert Allison, was expected to tell lawmakers Thursday that the company is evaluating the higher fees and tighter lending standards that it put in place over the past year.

"Done correctly, this should have long-term benefits for the mortgage market," Allison said, according to prepared remarks.
Fannie Mae and Freddie Mac are the dominant players in the U.S. mortgage market. Although they don't make loans directly to consumers, they own or guarantee more than $5 trillion in loans, about half of the nation's total.

The two companies saw their finances deteriorate as an alarming number of homeowners fell behind on their payments and went into foreclosure.

Rather than reassuring investors, the historic government intervention spread fear through financial markets about the health of banks and investment firms that may hold even riskier mortgage assets than Fannie and Freddie.

Dismal economic news is adding to the sense of urgency.

New home sales tumbled in August to the slowest pace in 17 years and the average sales price fell by the largest amount on record, the Commerce Department reported Thursday.

New homes sales fell by 11.5 percent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991.

The average price of a new home sold in August dropped by a record amount of 11.8 percent, to $263,900, compared with the July average of $299,100. The median price was also down, falling 5.5 percent, to $221,900.

Besides the weak housing report, the government said Thursday that new claims for unemployment benefits shot up last week to the highest level in seven years. Orders to factories for big-ticket manufactured goods fell last month by 4.5 percent, far more than expected.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT