Fannie Mae And Freddie Mac, How They Impact Real Estate

Posted by Lauren Spencer on Friday, January 10th, 2014 at 2:10pm.

Fannie Mae and Freddie Mac have been in the news quite a bit over the past few years, so it’s a good time to do a refresher on who they are and what role they play in the Santa Cruz real estate market.

Who Are Fannie Mae And Freddie Mac?
Fannie Mae is the Federal National Mortgage Association. Freddie Mac is the Federal Home Loan Mortgage Corporation. They were originally created to raise homeownership levels and increase the availability of affordable housing.

Fannie and Freddie don’t sell mortgages directly to homeowners. They buy mortgages from lenders, so the lenders can use the money to issue new home mortgages.

In 2008, due to mismanagement resulting in billions of dollars of losses, Fannie and Freddie were taken over by the government.

How Do Fannie And Freddie impact Santa Cruz Real Estate?
• They contributed to the financial crisis and real estate downturn, by loosening underwriting standards, buying and guaranteeing risky loans and increasing purchases of mortgage-backed securities.

• They are key players in the government’s Making Home Affordable foreclosure-prevention program. If your mortgage is owned by Fannie Mae or Freddie Mac, you may be able to refinance your loan and take advantage of lower interest rates.

• They influence mortgage interest rates and the availability of home loans. Freddie, Fannie and the Federal Housing Administration together now guarantee about 90 percent of all new mortgages, far above their historic level.

What’s Going To Happen To Fannie And Freddie?
Fannie and Freddie’s future is uncertain. An amendment to the bailout legislation passed in 2012 which will require both to wind down by 2018. But this will not happen soon, if at all. Congress must agree on a plan, which could take years, and then the market’s dependence on the companies and the financial backing they provide must be reduced.

As of the end of 2013, Fannie and Freddie will have repaid nearly all of the $187 billion dollar bailout loan back to taxpayers. In 2013, Fannie and Freddie made more than $100 billion and are involved in more than half of all new mortgages.

If you have questions about Santa Cruz real estate or how national or international events impact Santa Cryz Real estate, I’m happy to help.

For more helpful tips and information about buying and selling a Santa Cruz home, email me at lauren@laurenspencer.com or give me a call at 831.662.6522.

For additional real estate information, please visit my home page at www.MySantaCruzRealEstate.com.

About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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