September 29, 2020

Fannie Mae and Freddie Mac to be Phased Out

The Wall Street Journal is reporting that the Obama administration has released a white-paper that spells out the federal government’s reform plans to phase out the Fannie Mae and Freddie Mac mortgage programs.

This will have wide implications because Fannie Mae and Freddie Mac are responsible for 9 out of 10 mortgages made currently.

Here is a quick list of possible ways that these proposed reforms could affect home-buyers:

  • Home-buyers will be required to make  a 10% down payment, which is up sharply as you can now secure a mortgage with much less money down if you buy mortgage insurance.
  • Interest rates will likely increase.
  • The amount of money that you will be able to borrow will drop, however by how much is still unclear.

There are further possible effects to banks, lenders and other financial institutions, all of which will dramatically change the face of home-buying and getting a mortgage in America.

WSJ Article:  Click Here

Press Release:  Click Here

Read the text of the proposal:  Click Here (PDF)

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