Government Sponsored Entities become Government Controlled
Treasury Secretary Henry Paulson announced this morning that the federal government will take responsibility for controlling and capitalizing Fannie Mae and Freddie Mac (Watch the announcement on CNN). What were GSEs (government sponsored entities) are now GCEs (government controlled entities.) With tax payers and national debt underwriting the GCE’s loans, the goal is to restore faith in US mortgage bonds amongst international investors. It is a drastic move in the hope that mortgage rates will come down enough and that loans will become available to the point that the housing market will start to correct. I expect the mortgage guru’s will be recommending that borrowers float their rates if possible - and that they’ll be predicting that rates may fall this week in reaction to the news.
I’ll post the mortgage rate widget for you can to track rates for 30 year fixed loans in Zillow Mortgage Marketplace tomorrow (I don’t think lenders post rate updates on Sundays - let me know if I’m wrong on that!)
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Government Sponsored Entities become Government Controlled
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