In the go-go years of the U.S. housing boom, virtually anybody could get a few hundred thousand dollars to buy a home, and private lenders flooded the market, aggressively pursuing borrowers no matter their means or financial history.
Now the pendulum has swung to the other extreme. Only one lender of consequence remains: the federal government, which undertook one of its earliest and most dramatic rescues of the financial crisis by seizing control a year ago of the two largest mortgage finance companies in the world, Fannie Mae and Freddie Mac.
While this made it possible for many borrowers to keep getting loans and helped protect the housing market from further damage, the government’s newly dominant role — nearly 90 percent of all new home loans are funded or guaranteed by taxpayers — has far-reaching consequences for prospective home buyers and taxpayers.
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The outlay has already reached about $1 trillion over the last year and is rising. During that time, the government has pumped more money into the mortgage market than has been spent on Medicare or Social Security or the defense budget, more even than Washington has paid to bail out banks and other struggling companies.
[quote=scaredycat]so what does it all mean? does this mean prices have to remain stable no matter what?[/quote]
I’d say it means the Feds now dominate mortgages which in many
respects means they control price and supply. if they don’t make
mortgages available prices fall. if they increase rules, prices fall.
if they release inventory prices fall.
On the other hand the feds have a lot more hang time then a bank
so they can withhold inventory, print mortgages and choose prices.
so far people are having a hard time documenting to meet FHA standards.
[quote=scaredycat]so what does it all mean? does this mean prices have to remain stable no matter what?[/quote]
I’d say it means the Feds now dominate mortgages which in many
respects means they control price and supply. if they don’t make
mortgages available prices fall. if they increase rules, prices fall.
if they release inventory prices fall.
On the other hand the feds have a lot more hang time then a bank
so they can withhold inventory, print mortgages and choose prices.
so far people are having a hard time documenting to meet FHA standards.
[quote=scaredycat]so what does it all mean? does this mean prices have to remain stable no matter what?[/quote]
I’d say it means the Feds now dominate mortgages which in many
respects means they control price and supply. if they don’t make
mortgages available prices fall. if they increase rules, prices fall.
if they release inventory prices fall.
On the other hand the feds have a lot more hang time then a bank
so they can withhold inventory, print mortgages and choose prices.
so far people are having a hard time documenting to meet FHA standards.
[quote=scaredycat]so what does it all mean? does this mean prices have to remain stable no matter what?[/quote]
I’d say it means the Feds now dominate mortgages which in many
respects means they control price and supply. if they don’t make
mortgages available prices fall. if they increase rules, prices fall.
if they release inventory prices fall.
On the other hand the feds have a lot more hang time then a bank
so they can withhold inventory, print mortgages and choose prices.
so far people are having a hard time documenting to meet FHA standards.
