Unless you’ve been under a financial rock the past week or so, doubtless you know of the federal government’s announcement that it would bail out two of the nation’s largest mortgage holders (by some accounts, they hold 50% of all mortgages in the U.S.), Freddie Mac and Fannie Mae.
But what does this mean for buyers? Noted below are some recent comments from real estate, mortgage and economic experts, though the general opinion is that the move will serve to stabilize the credit market and make any future declines in selling prices probably lower than they would have been had the bailout not taken place.
In the short term:
Marve Stockert, executive director, Illinois Association of Mortgage Professionals, says, “It’s too soon to have any dramatic effect on consumers, but that could consumers. If they [the federal government] take them [the two organizations] to the level for low and moderate income people, it will have a dramatic affect on the industry.”
Evan Geiselhart, owner of HomeTrust Mortgage Corp., in Schaumburg, remarked, “In the short term, it’s very good for consumers. In the long [term], it’s very good for consumers and taxpayers. In the medium term, it’s scary because we’re in uncharted territory.”
In the long term:
Patrick Callan, incoming president, Illinois Association of Realtors, noted, “This is a positive for consumers. Considering Freddie Mac and Fannie Mae held 50 percent of the mortgages for the real estate market, they needed the bailout. If it had failed, it could have been catastrophic.”
And, finally, Alexander Paris Sr., chief economist at Barrington Asset Management in Barrington Hills, remarks, “This will help the mortgage market to stabilize. In will, in time, ease lending standards at banks and then make it easier to get loans.”
Yet another reason why now is the perfect time to purchase a new home. Smart consumers, realizing that selling prices on their existing homes, might continue to fall in the future, should capitalize on the relatively above average selling prices the Chicagoland market still enjoys and perhaps be a bit more aggressive in their desire to sell — before they lose even more equity in their current home.