The Federal Reserve is no longer backing Freddie Mac and Fannie Mae Mortgages

As of March 31 the Federal Reserve is no longer buying mortgage-backed securities (MBS), terminating a large component of its effort to stabilize and stimulate the economy. The Fed poured $1.25 trillion dollars into purchasing risky bundles of housing loans, providing capital for troubled lenders and investors in the mortgage-backed market.
The Fed's purchasing program provided much-needed liquidity for government-run mortgage financing companies Freddie Mac ( FRE - news - people ) and Fannie Mae ( FNM - news - people ) to buy bank loans issued to home buyers. The program also allowed mortgage rates to remain abnormally low, which let borrowers make more manageable payments and new home buyers purchase properties. Indeed rates have been low: 30-year fixed mortgage rates at 5% interest and adjustable mortgage rates with interest in the low 4s.
Article Control
Many analysts and investors remain skeptical over the Fed's decision to stop buying MBS, worrying the move may push adjustable interest rates higher. Higher rates could trigger a rise in loan delinquency rates and therefore foreclosures; it could also cause further value depreciation of properties, since buyers would not be able to afford to spend as much on the properties themselves. In turn, higher loan delinquencies would deter private investors from buying mortgage-backed securities, drying up liquidity.
Freddie Mac's CEO, Ed Haldeman, does not share this skepticism. "There's not going to be, at least in the short term, a major dislocation and a major move up in mortgage rates."
Video: What Will Happen To Mortgages?
If anyone has a pulse on the potential for rising foreclosure rates, it's Haldeman. Fannie, Freddie and government programs from the FHA and VA account for more than 90% of the single-family home loans on the market. The Fed will also do its part to keep rates low, as it has reserved the right to resume purchasing MBS if necessary.

If your worried about foreclosure American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! Contact us we can help.....

American Eagle Realty
www.american-eagle-realty.com
502-969-1801