The End of the Road for Fannie Mae, Freddie Mac?

Fox news reported early this morning that the Obama administration has laid out a plan for phasing out the governments backing and control in Fannie Mae and Freddie Mac.  I can’t see how this will be much of an issue like the article is claiming though.  The government has already given them the $150 billion they needed to survive.  This also will give them the ability to make their own rules and set their own long term plans into action. 

As we all know one of the large contributor of the market downswing was the government forcing ultimatums on Fannie Mae and Freddie Mac to provide types of loans they did not want to originate in the first place. Now that they have received the government subsidies and they have the ability to make their own guidelines moving forward, I feel this will actually help strengthen these companies. I do also believe there will be an increase in interest rates associated with this change.  The increase will mainly be due to the treasuryno longer supplying Fannie or Freddie with cheap money.  This being said now is the time to buy if you are interest sensitive. How all of this will affect the Merced housing market, we will just have to wait and see.

Fox Story can be found at : http://www.foxnews.com/politics/2011/02/11/treasury-report-outlines-path-winding-fannie-freddie/

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