Fannie Mae-Freddie Mac Changes Might Salvage Residential Market

Submitted by Ronald Tennant with Metrocities Mortgage:

Mlive.com (05/22/2008); Stevens, Lynn
Two Michigan-based lenders--Bank of Holland's Mike Townsend and National City Bank's Shirley Morford--this week predicted that banks will firmly support the changes Fannie Mae and Freddie Mac recently proposed to home mortgage loans. Townsend states, "From a global perspective, anything they will do to calm the markets, provide liquidity for banks and mortgage companies to sell their loans into the secondary market, will at some point in time create a benefit to our clients." The two government-sponsored enterprises have proposed four changes: the first would enable borrowers to refinance up to 120 percent of their property value if they are current on mortgage payments; the second establishes a program to help people rent-to-own foreclosed homes; the third provides $10 billion to state housing authorities for qualified first-time buyers; and the fourth would price jumbo conforming loans on par with conforming loans through the remainder of this year. Morford comments, "Under these new proposals, the banks will be able to help people that are under water or allow some of the foreclosed properties to be occupied by renters."