St Louis Mortgage Blog

St Louis Home Mortgage and Refinancing News -

News:  More support for Fannie and Freddie

The U.S. Treasury said in a Christmas Eve press release that it would provide unlimited capital to Fannie Mae and Freddie Mac for the next three years, effectively opening its checkbook  to the government-controlled companies in a bid to reassure investors in their debt. 

After December 31, the Treasury would need the consent of Congress to make such changes.  So, it's no surprise it moved a week before its authority to change the terms of its agreements with the companies that were set to expire. 

So far, the government has pumped $60 billion into Fannie Mae and $51 billion into Freddie Mac.  The new terms announced yesterday would allow the cap on Treasury's support to increase by the amount of the total net loss the firms experience over the next three years, beginning on January 1, 2010.

The cap in place at the end of 2012 would apply thereafter.  Of course, the changes come come as Fannie's and Freddie's regulator, the Federal Housing Finance Agency, on Thursday approved multimillion pay packages for the firms'
top executives.

The pay announcement and the sweeping increase in the government's commitment to backstop the companies are certain to stoke anger from the companies' critics on Capitol Hill. 

"The Obama administration's decision to write a blank check with taxpayer dollars for the continued bailout of Fannie Mae and Freddie Mac is appalling," said Rep. Scott Garrett (R., N.J.). 

He argued the timing of the announcement, on Christmas Eve, was "designed to try and sneak the bailout by the taxpayers."

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Good news for consumers:  Take advantage of the home buyer's tax credit for your next home loan by calling 314-698-4092.  Ask for Steve Swan or Doug Stahlschmidt.