It’s official. Yesterday, the Bush administration seized control of troubled mortgage giants Fannie Mae and Freddie Mac, trying to stabilize the troubled mortgage and housing market. The Treasury Secretary Henry M. Paulson, Jr. hopes that by “providing fresh capital to the two companies will eventually lead to lower mortgage rates, spur home-buying demand and slow the plunge in home prices that has ravaged many areas of the country,” according to the Worcester Telegram & Gazette (Mass.). The bailout could cost taxpayers tens of billions of dollars. The companies, which together own or guarantee about $5 trillion in home loans (or half the country’s total) have lost $14 billion in the last year. “Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie.”
For more information about the bailout, visit The Treasury Department Web site. For additional information about the current housing situation, read our new article, “The Mortgage Crisis: How It May Affect You”.
Credit: Worcester Telegram & Gazette