Fannie going bye bye??

Question

The rumor on the block is that Fannie Mae could be no more in the near future.

My question to all BP Members is: IF this happens, what would it mean to us investors and how would it affect our business, be it buy and hold or for us flippers. Please support your answers/opinions.

Second question: Do you believe this will come to fruition?

Thanks for your time.

- Will Barnard

Loc R. · Answer

I personally think it's a good thing for us taxpayers.

There will be a lot of low-income group advocates that will make a stink about it, but in essence the free/private market will run its course.

If it does actually happen, I see a lot of private seller carry deals going on.

The higher priced stuff will take a hit, as less people will qualify under these newer (30% down, anyone?) standards.  Of course all-cash buyers can & will do what they want.

As to whether it will happen, I personally hope so (of course after I get my share of cheap 30-year loans in place).

Gregory Childs · Answer

You'll have to have sqeeky clean credit to buy a home and a good downpayment. The banks will have to be VERY careful before they lend money.

More DOM, less buyers, more incentives to help people qualify. Probably a further price adjustment (downwards). It could be very messy. Those with cash will be able to take advantage - those with inventory will suffer.

Rental rates will probably increase (based on mounting demand for quality rentals).

It will reach an equilibrium at some point and we'll have a new normal. Sounds familiar!

TTFN,

Greg

Mark Betche · Answer

IMO, there should be no government intrusion into the housing or other markets for thea matter.

F&F going out of business would be great, in the longterm, for free market forces. It would stablilize the housing market and reward those who use good personal financial habbits.

I've heard there is a three teir possibility for the governments continued intrusion into the housing market which keeps FHA alive in all.

http://www.cnsnews.com/news/article/obama-administration-offer-three-solutio

Jeff S. · Answer

The Fed would raise rates to combat inflation. Since the Fed has a dual mandate to keep unemployment low and inflation low, it is acting differently from Europe who is raising rates because of inflation, with a single mandate.

Will Barnard · Answer

Anyone else care to take a stab at this question?

Mogi P. · Answer

No inputs from me, just a question. So I understand the fed has interest in keeping the interest rates low because of the national debt, so what would be possible catalysts for the rates to go up?

Will Barnard · Answer

Great input Jon!

Jon Holdman · Answer

Nothing that drastic would happen.  I'm absolutely certain.  When I graduated from college and moved to Houston in 1982, OO mortgage rates were 15%.  ARMs were very popular.  That situation continued for some years.  The first house I bought, in 1987, was with owner financing at 9% for 15 years.  And I was happy to get it.

More evidence that 30 year fixed loans are only there because of FM & FM support is in the commercial space.  I've not tried to get a commercial loan lately, but several people here have mentioned that long term, even 15 or 20 year, fixed rate loans are impossible to get.  Bankers are only wanting to give 3-5 year locks.  I agree 30 year is the way it works in our market now.  But I believe that's only because FM & FM drive that market.

And the open market determines the rates on those notes.  The Fed sets short term rates, but the market, which is driven by many different factors, sets long term interest rates.  FM & FM are one factor.

Will Barnard · Answer

With that in mind, anybody have thoughts on this topic or follow-ups to the replies?

Rob Gillespie · Answer

I never worry about which way the wind blows. LOL! There are positives and negatives to almost all situations.  :mrgreen:

Fannie going bye bye??

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