Written by: Anthony Miosi
You could argue that throughout this
recession, the market that took the biggest hit was the housing market. It
didn’t matter how beautiful your home was, or how nice of an area it was in. If
you were going to try and sell, you were undoubtedly going to take a hit.
Houses that were once worth $500,000 were worth $350,000. Homes that were
selling for $1,000,000 now sold for $700,000. Because now is such a terrible
time to own a home, nobody wants to buy. And due to the recession, many don’t
have the money, even if they wanted to buy a home.
Fannie Mae & Freddie Mac, commonly known
as Fannie and Freddie own more than half of all US home loans, and on March 27th
they made an announcement that they were going to make modifications to their policies, to make
taking out a home- loan more appealing. An article from the Los Angeles Times
states: “In a push to
simplify loan modifications, many borrowers who become 90 days or more past due
on mortgages backed by Freddie Mac and Fannie Mae will be offered lowered payments
without having to prove hardship.” What this
article is saying is that, normally, in order to receive a reduced payment
loan, you needed to prove that you were in financial hardship, now you no
longer need to do so, which basically means that anybody can receive low
interest/payment loans. The Wall Street journal better depicts the new policy
modifications that Fannie and Freddy have announced: “The policy change will also allow borrowers who make three
reduced payments during a "trial" modification to automatically have
the modification made permanent. Previously, borrowers had been required to
show proof of hardship and document their financial situations before the
modifications became permanent. The policy change is designed to eliminate a
stumbling block that had frustrated borrowers and lenders over the past four
years.” Now that Fannie and Freddie have done this, hopefully this is
going to encourage many more people to take out loans from them, in attempt to
give the housing market a boost.
Not only will
this boost the housing market though, all of the Mortgage Insurance companies
that took huge losses due to the recession, will also now see increases in
there business. This will happen because everyone taking out loans for houses,
will now want mortgage insurance to protect that.
Hopefully, now
that Fannie and Freddie have announced this, the housing market will see a big
increase, which we know directly relates to our economy, once people feel
comfortable with where they are living, they will be more motivated to go out
and buy things, which is exactly what this country needs, to get completely out
of this recession. If the housing market is what took the biggest hit during
the recession, then this is the market that desperately needs to be jumpstarted
the most, If we achieve a booming housing market once again, that will carry us
out of the recession.
I had just recently read a article from the New York Times about how the Housing market has improved the past year. The prices of homes have increased and sales have picked up. As you said, America spent a long time in a housing depression (48 months to be exact).
ReplyDelete-Maci Woods
Dear Anthony, I really did enjoy your blog on the housing market because it seemed like you had done a lot of researcher to back your claims up. As we all know the housing market has improved a little since the beginning of the rescission, and hopefully for the sake of America it'll continue. This market influences even more sub markets than you described because of the tax that people pay too. Thank you for sharing your knowledge of the housing market with me and all that enter this site!
ReplyDelete-Dan Cieslak
This article was very interesting. It was very obvious that you took a lot of time to research and find information on how the housing market has improved in the recent years. In the article when you said "now you no longer need to do so, which basically means that anybody can receive low interest/payment loans" if anyone can get a loan without any proof that they need it, won't this cause or economy to go into more of a debt? People who don't need a loan and could get the money for whatever they needed fine by themselves, then the gov't. will be loaning out more money creating more debt for our country.
ReplyDeleteThis was a very interesting article. I liked how you descried the new and improved housing market. It is very good to see that the housing market is getting better overtime. It was suffering pretty bad for a little while. It does seem very interesting though when you said that it is very easy for people to get loans now for houses. What if their credit is already bad? This could be a problem and could leave many more people in debt than there already are. This is good for the economy though, because it encourages people to spend money and that is what we need during a time like this! Great idea to help get us out of this recession.
ReplyDeleteI completely agree, and I think it is a great idea to jumpstart the real estate market again. With these big purchases we can get the economy going again, and the loans are definitely helpful. I think it was very smart because even if the loan is reduced, both the Fannie and Freddie agency will see an increase in income, but the Mortgage Insurance companies will also see an increase in income which will ultimately increase revenues and stimulate the economy.
ReplyDeleteI very much agree as well, this is a good view point to have on the housing market. The only real way to get the housing market rolling again is the give it a little push, and since people are being cautious and not spending, taking out loans and allowing people to buy houses will definitely stimulate the housing market. Since the Fannie and Freddie agency have such a big portion of the control they will definitely benefit from this, so it was a good move on there part and a step in the right direction. Hopefully however people will be paying off these loans and if there not maybe ceilings should be put in place, overall though I think this was an interesting article and a smart move on Fannie & Freddie's agency.
ReplyDeleteI would agree as well that it is a great idea to jump-start the real estate market. And with these large purchases it is a fair chance that we can get the economy up and going again along with the loans. It was a very wise choice and investment because if the loan happened to be reduced the income would still increase for BOTH Frannie and Freddie agencies. Ultimately, all agencies should see an increase in their income which can increase revenues as well. Just little things like this are all factors in stimulating our economy.
ReplyDeleteIt is a really good idea to better parts of the economy. It would encourage people to borrow more and not have to worry about payments down the road as much thus getting more money flowing in the economy. Likewise I think it is a strong move for Fannie and Freddy because their income would also hike up. With more money being spent it will ultimately put us on track to strengthening more aspects of the economy.
ReplyDeleteI agree completely with you that this market desperately needs a revival. The change in policies of Fannie and Freddie that you mentioned are also taking place throughout the other half of US home loan owners. With these changes taking place it allows opportunities for growth and this could get people to believe things can get better and will push them to spend more in this market, ultimately getting America’s economy on the rise.
ReplyDelete