Fannie and Freddie are taken over NOW WHAT?

WOW!!! If I had called you up 3 years ago or even a year ago and told you that 265 lenders, 12 Federal Banks and that Fannie and Freddie, as we knew them, would all be gone, you would have said I was crazy.

Well, my friends, this is exactly what has happened. What does it mean for us. Well there are a couple ways to view it all I think. One case is it is one of the most interesting dynamic in American economic history and I could discuss the values or lack therof of the sceuritizations and derivative markets that brought us here for hours, but most of you don;t care about that stuff, lol.

The more applicable case is what will happen to the market. The long term result is probably a good solid stable base being brought back as the giants are taken back to profitability ( with our tax dollars) and then sold off in pieces forming all new smaller companies. The short term result is going to be lower rates and there fore theoretically more sales thereby lowering inventory and stabilizing prices. Today we saw rates from our wholesalers fall about 1/3 of a point overall. That's great news and I think there will be more.

Now of course there must be a downside. Notwithstanding the obvious goverment interference with private enterprise ( nearly never good) you can bet that many credit guidelines will be tightened even more than we have seen this last year. The Treasury needs to retrun these companies back to profit as fast as possible so they can be sold off later.

Finally the best part of this whole thing may be that we in the mortgage business can finally begin to give solid answers and know what the rules are going to be. Far too many days the past 18 months, those of us who practice daily have had to change direction literally in the same month many times. This alone will help us all. Also the USDA has announced new streamlined guidelines that we feel are the most helpful. Did you know that the USDA gives guarantees for up to 102% of appraised value in about 75% of the areas in Florida? The rates are fixed and in our opinion there is no better deal. We have created a private label around the program called the Ultimate Buyer Program.