176,446 New Listings - March 2010 - Last update March 19, 2010 6:15 AM ESTThe Bail Out Factor Behind The Foreclosure Crisis
The bail out factor behind the foreclosure crisis needs to be understood by the ordinary man on the streets of America.
With the news of the government lending a helping hand to the mortgage giants Fannie Mae and Freddie Mac the stocks rallied. The duo has in its pockets nearly half the mortgage contracts of the country. Some are roundly blaming them for the foreclosure mess.
Unfortunately critics are not very optimistic about the effects of the move on the foreclosure-dominated market. The foreclosure crisis has triggered off a closed circle of woes with one leading to another and this will not be easily snapped.
Fannie and Freddie have to provide funds to banks so that the latter can lend it to potential buyers of REO houses. To get the capital Fannie and Freddie resorted to selling the mortgages as securities to investors across the globe. It was all hunky dory until the foreign investors started feeling uneasy about the housing market. They began to mull over a big ‘if’. If the feds took over then what would be impact on their holdings? When questions arose about the solidity of Fannie and Freddie the government had no other option but to step in.
The ordinary American need not fear if the mortgage is a fixed rate contract. For them everything will be the same. For those mulling over purchasing or refinancing the good news is that the government intervention will lead to stabilization of rates. In fact these might even register a modest fall.
The next question is about the housing prices. Rates play an important role in persuading those sitting on the fence to walk in and start making purchases. Thus the stabilization factor will be a strong argument.
The general mood of the market plays an important role. The ordinary man might not be thrilled about the headlines screaming about the government intervention. In the final count it is the demand and supply factor that will hold the key. With foreclosures reigning supreme daily hundreds of REO properties are rushing into the market.
The foreclosure victim wants to know what hope is there for the individual against the backdrop of these big moves and hype. The government is not at all interested in foreclosing on thousands of houses. Rather it is going all out to see to it that people continue to stay in the houses that are their homes. As an example the instance of IndyMac is citied.
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In .
September 24th, 2008 at 2:33 pm
[...] next six months will be very important for the direction of the foreclosure crisis. Investors will be keeping a hawk’s eye on the volatile financial drama being unfolded related to [...]
October 2nd, 2008 at 3:28 pm
[...] those conducting a survey on this fall out of foreclosures say that it is a result of the foreclosure crisis that kicked off in earnest from 2007. The problem has deteriorated since a report was released in [...]
October 3rd, 2008 at 3:09 pm
[...] the middle of the raging foreclosure crisis Wasilla in Alaska is doing well with its affordable houses. Since Sarah Palin became a nominee for [...]
October 6th, 2008 at 8:08 pm
[...] are lessons to be learnt from the raging foreclosure crisis – lessons about how to go about with mortgages in the future. The times are troubled. Help is [...]
October 9th, 2008 at 4:16 pm
[...] is poison for one can be meat for another. The foreclosure crisis has translated into millions for some CEO’s. New officers will find their pockets slimmer with [...]
October 10th, 2008 at 6:16 pm
[...] Foreclosure crisis turned out to be a boon for some like Christopher Dodd. The collapsing financial institutions had been more than generous with the head of the Senate Banking Committee, Christopher Dodd. [...]
October 13th, 2008 at 9:00 pm
[...] prices started going up.” In 2006 the number has gone up by 9% to 54% in one year only. With the foreclosure crisis continuing to rage there is no doubt that the percentage has further [...]
October 16th, 2008 at 4:39 pm
[...] to save their financial houses. It is expected in Europe that more help is in the offing as the foreclosure crisis continues to spread like wildfire in USA. From USA across the Atlantic to Europe big names have hit [...]
October 16th, 2008 at 4:51 pm
[...] contain the foreclosure crisis political pandering need to be checked. Unbridled spending by consumers may be at the root of the [...]
January 29th, 2009 at 3:52 pm
[...] foreclosure bailout measures are failing to protect the ordinary victims – of that there is no doubt. There is no [...]
February 2nd, 2009 at 2:57 pm
[...] some of the consequences of the foreclosure crisis it is feared that lenders will not accept as security any asset whose value is under suspicion – [...]
February 11th, 2009 at 2:31 pm
[...] more ways than one Simsbury has been adversely affected by the foreclosure crisis like on issues related to retirement and salary [...]
February 13th, 2009 at 2:42 pm
[...] Senate will be deciding before the inauguration whether to sanction the second half of the bailout funds. Obama has argued that his administration will urgently require this amount as [...]
March 9th, 2009 at 3:07 pm
[...] Reserve developed a strategy to modify the loans (tied to assets) it has got from the federal bailouts. The Federal Deposit Insurance is going ahead with its own plans for making fresh agreements with [...]
March 10th, 2009 at 2:44 pm
[...] reports of extravagant spending by the banks as well as the investment firms that are receiving bailout fund [...]
April 22nd, 2009 at 3:13 pm
[...] pundits are in a tizzy trying to chalk out solution to the foreclosure crisis but there is a strong opinion among many that Uncle Sam should directly take over the mortgages, [...]
May 26th, 2009 at 2:29 pm
[...] worse then his schedule for withdrawal from that zone will get delayed. Although USA is keen that Europe takes on more military responsibility for bringing back stability to Afghanistan it is not likely [...]
May 27th, 2009 at 3:03 pm
[...] foreclosure crisis has changed the character of California’s job market – no longer is it the Mecca for job [...]
May 28th, 2009 at 4:02 pm
[...] Despite some drop in expectations, Obama should be given credit for his efforts in easing the foreclosure crisis. [...]
June 1st, 2009 at 2:13 pm
[...] there is a will there is a way and a simple solution to the foreclosure crisis can be chalked out. During the last six months the economy has taken a turn for the worse and the [...]
June 2nd, 2009 at 3:16 pm
[...] a manmade disaster.” And for this very reason something has to be done. He added “Clearly, the foreclosure crisis of the country far exceeds the ability of local governments to solve it, but we’re trying be [...]