Wow is all I can say right now! In an unpresendented move, yesterday the Treasury Department and the Federal Reserve began discussing with our leaders in Congress a large plan to buy up huge numbers of distressed mortgages held by investors and financial institutions.
Details on this plan are not complete, but when everything is worked out, this could be the largers bailout in US History. Much larger than the Resolution Trust Corp, which is what this plan is based on. (For more information on the Resolution Trust Corp, please visit this site:
Several blogs are going on about this new proposal, both for and against it. With the Federal Reserve loaning, just yesterday, almost $300 billion to worldwide financial markets, one question is where is the money going to come from? Ultimately, US Taxpayers will be responsible for any portion of the assests that the government cannot resale.
And the la
rge influx of money did little to stop the panic and make the general
rge influx of money did little to stop the panic and make the general public feel more secure. But the overall goal in all of this is for the government to eventually make money on the well unpriced securities that it does purchase.
So what does this mean for our real estate market? One thing it will do is free up money for these institutions to lend to new home buyers. Lending institutions rely on the mortgage payments of existing loans to fund new ones. If those loans are in default, then they don't have money to loan to new buyers. And it also makes the qualification process much tougher. All of this would mean more sales in our area.
If you would like more information, this is a great article that I found on the LA Times site:
I hope you have a great weekend and if you know of anyone looking to buy or sale a home, please have them contact me!
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