Fed Seizes Troubled Mortgage Giants, Should Benefit Greater Birmingham

The federal government took control of the country’s largest providers of home loans Sunday in a move to sure up the country’s sagging housing sector. Fannie Mae and Freddie Mac guaranteed half of the country’s home loans valued at $5 trillion, but the long term sustainability of the companies was in question after $15 billion in losses so far this year thanks to rising national foreclosure rates.

September 8, 2008

• Fannie Mae & Freddie Mac taken over

• UAB Finance Chairman applauds move

• Should shore up housing market

BIRMINGHAM, Ala. - The federal government took control of the country's largest providers of home loans Sunday in a move to sure up the country's sagging housing sector.  Fannie Mae and Freddie Mac guaranteed half of the country's home loans valued at $5 trillion, but the long term sustainability of the companies was in question after $15 billion in losses so far this year thanks to rising national foreclosure rates.

"The takeover is a good move, because it should help strengthen the housing market by freeing up more money for mortgages at lower interest rates" Lary Cowart, Ph.D., interim chair of the Department of Finance, Economic and Quantitative Methods at the UAB School of Business, said.

News of the Freddie and Fannie takeovers is already positively affecting the housing market Cowart said, pointing out that home loan interest rates had fallen 0.3 percent by Monday afternoon, the day after the takeover announcement. 

"That means a buyer can afford a home price three percent higher than they could afford for the same monthly payment just last Friday," Cowart said.

"This will help the local Birmingham market, because there will be better access to credit and loans for qualified buyers that want to make a home purchase," he said.

Lary Cowart can help you localize the Fannie Mae, Freddie Mac takeover for your upcoming editions or broadcasts with interviews today and through the week.