30 Year Mortgages may go Bye Bye.

Remember the movie “Bye Bye Birdie”?  If your my age, you’ll remember it. Well, if Fannie Mae, and Freddie Mac are shut down as it the rare shared  goal of  Republicans and the Obama administration, the 30 year mortgage could become extinct, like the Dodo bird.  Certainly, the 30 year mortgage could transform itself into a luxury item that only a select few can take advantage of.

The 30 year mortgage has been around longer than me, since the 1950’s.  Fanny Mae, and Freddie Mac were created to increase the availability of mortgage loans by creating liquidity in the market. These companies are quasi-government entities, which means if they make profit, great, if they don’t, the taxpayers take it in the neck. Well anyway, their purpose is to buy up mortgages issued by banks and mortgage lenders. Fannie and Freddie buy loans from approved mortgage sellers, either for cash or in exchange for a mortgage-backed security (MBS) that comprises those loans and that, for a fee, carries guarantee of timely payment of interest and principal. This MBS, allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market.

These companies allow people to borrow money at lower rates and longer periods, making it easier to buy a home of your dreams.  If they are shut down, which will take years if ever that takes place, then investors will be loath to invest funds in long term mortgages. Without the guarantee that they will be paid back, without the implicit backing of the American Taxpayer, it will be difficult for lenders to raise money for mortgages that no longer carry government guarantees. Without fresh money to make new loans, the US housing and credit markets could lose flexibility and liquidity, resulting in increased costs, lower profits for banks, and ultimately, fewer people owning a home.

The time to buy is now. Prices are excellent, and there are a ton of great deals out there.  Visit me at http://tonyfontana.com  and take a look at our specials link to see about some great real estate buyer commission rebates. Or call me at 917-331-9686 to review your needs and desires for a new home today.