Local Tampa Mortgage expert, Dave Presnell shares his thoughts on the recent takeover of Fannie Mae and Freddie Mac. It's still too early to know what the fall out will be but I have no doubt it's going to be significant and probably be like unpleasant medicine to swallow when we finally have to address the issues.
I am letting buyers interested in Clearwater Real Estate - now is the time to get serious. Rates dropped on this news and rules stayed the same in the short term - many believe next year both will be less attractive and we already have some of the best prices we've seen in years.
If you'd like to discuss buying property further just give me a call at (727) 710-8035 or if you have Tampa Bay mortgage questions I highly recommend you give Dave at his office number 813-514-4993 or his cell phone number 813-690-0591
Your neighbor, a heavy smoker, falls asleep while holding a lit cigarette and his house catches fire. He smells the smoke, realizes his life and property are in danger and calls the fire department. You hear the commotion outside, walk down your driveway and learn what's going on.
Do you get angry at the fire department for responding to an obvious crisis caused completely by your neighbor's carelessness? Do you insist that the firefighters leave immediately and let your neighbor's home burn to the ground? Do you insist the tobacco company that made the cigarettes, the truck driver who delivered them to the convenience store where your neighbor bought the cigarettes, or the clerk there who took his money come put out the fire instead?
No, of course not. You may be upset with your neighbor for his carelessness, but you realize that allowing his house to burn puts yours at risk from burning embers. Doing nothing could well lead to your own home burning down, too.
Metaphorically speaking, thousands of U.S. taxpayers are enraged today that the federal government is stepping in to put their neighbor's house fire out.
Over the weekend, the government announced that it is placing Fannie Mae and Freddie Mack into receivership- in effect, taking them over. Already TV news commentators are fanning angry taxpayer's flames by saying it will ultimately cost them untold billions and billions of dollars. Taxpayers are angry, they say, because they will have to bear the cost of other people's greed and poor decision making that led to the housing and credit slump we currently are experiencing.
While they may rightfully be enraged about the causes of the current problems, to vent their anger at the government for this and other recent actions makes about as much sense as yelling at the fire department for responding to a fire. Ultimately, doing nothing will cost taxpayers far more than "putting out the fire" will. I understand their frustration at having to foot the bill (hey, I'm a taxpayer, too!). However, I also understand how the market works. Without some assurance to investors in these securities that they will get paid, interest rates will rise, mortgage financing will become harder and harder to obtain, and the housing market will continue to languish. Home values would drop or stagnate for an even longer period of time which ultimately could cost taxpayers more. Most people don't see that though because the talking heads on TV will play up the fact that taxpayers are footing the bill for (fill in the blank- buyers, realtors, mortgage lenders, whomever your favorite villain du jour is) greed and bad decision making.
This fire was caused by poor decision making on the part of a lot of people- buyers, realtors, mortgage lenders, investment houses and investors on Wall Street, just to name a few. Just as with a house fire, the first and immediate action is to put the fire out. Then investigate the cause and take corrective (and preventative) action. Don't tell the fire department to pack up and leave.