Conventional loans go up to $417,000 for a single family residence in most states. Loan amounts are higher in certain counties around the country were the median price of a home is higher. Most of these conventional mortgages are bought by Fannie Mae and Freddie Mac. The Fed took over these agencies a few months ago. The Fed announced last week that they will be buying $750,000 of mortgage bonds and $300,000 of long term treasury debt to keep rates low. The markets have been responding nicely and the rates are low!
I recently read that jumbo loans (over $417,000) will see some lower rates soon. Yeah!! These loans were also securitized and sold on Wall Street, but the appetite for jumbos has been non-existent for months thanks to the craziness in the financial markets.  There have been a few companies with lower rates on jumbos and now more lenders will be offering better terms for these loan too. That should make more affluent borrowers happy!

 
Another big move today was made by the Fed….my they have been busy lately! The finally have a plan in place to clear out the toxic assets from the financial sector. It’s a public-private plan that would have private investors and the Treasury put in equal amounts of money that would then be backed by a loan guarantee from the Federal Deposit Insurance Corp. to buy loans and mortgage-backed securities from the banks. Both the taxpayers and the private investors would gain from any profits if the assets eventually gain value. The taxpayer would take most of the downside risk. There has already been interest into the plan by private sector companies such as Pimco. Stocks went through the roof today with the Dow gaining almost 500!

Personally, I share the same bailout fatigue that most Americans feel, but I wonder if the price of doing nothing is far greater. What is it that we do not know?

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