Borrowers Still Facing Hurdles After Government Intervention

Feb. 9, 2009 - PRLog -- The current real estate market conditions have had adverse affects on investors, homeowners, homebuyers, realtors and others.  To make matters more complex, the two largest mortgage guarantors, Fannie Mae and Freddie Mac, are now under government control and have since raised the fees that they charge lenders on loans that they insure or purchase.  

The Federal takeover of Fannie Mae and Freddie Mac refers to the placing into conservatorship of government-sponsored enterprises Fannie Mae and Freddie Mac by the United States Treasury in September of 2008.  It was a significant event in the ongoing Subprime mortgage crisis.

The increased fees charged to lenders by Fannie Mae and Freddie Mac are then passed on to borrowers, and are essentially a result of the two agencies’ losses in the housing market.  Refinancing and purchasing applications, even those with good credit, are being rejected or offered at an unaffordable rate.  Another concern is the number of potential homeowners who back away after they qualify, having found out how difficult it was to receive the advertised interest rates.

Relatively minute differences in credit scores are generating cosmic differences in additional fees and charges on mortgage loans, scaring off many buyers and making it impossible for some to invest.

Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. Not to mention a recent investigation by the Justice Department and the SEC into the accounting practices at Freddie Mac revealed accounting errors in the amount of 4.5 to 4.7 billion dollars and resulted in the termination of three of the company's top executives.  

Real estate rates are falling, yet borrowers are facing a greater number of hurdles and costs associated with qualifying for a mortgage.  The market is in less than savory shape, and the increasingly stringent guidelines being adopted by lenders is doing nothing to nurse it back to good health.  Major Banks and real estate brokers agree that the number of qualified borrowers continues to drop at an alarming rate, leaving many potential buyers who would have been considered ideal applicants empty handed and the market in a prolonged state of recession.  

Ongoing investigations by Congress, particular the House Finance Services subcommittee that oversees the activity of GSEs, will determine the future role of Fannie Mae and Freddie Mac and the secondary mortgage market that they dominate.   For further information on South Florida real estate market conditions, contact an expert at Finn Real Estate Enterprises and visit their website at http://www.forsalefinn.com.

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