Govt update on the mortgage market

The Obama administration has given congress 3 options to choose from, to decrease government involvement in the mortgage market. The 3 options are;

* No Government role, except for already existing agencies, ex. FHA.

* A government guarantee of private mortgages triggered only when the markets are in trouble.

* Government insurance for a targeted range of mortgage investments that already are guaranteed by private insurers. The govt guarantee would go into affect, only if those private companies could not pay.

Any of these 3 options would lead to higher rates. The proposal is for the government to withdraw it support of the mortgage market over the next 5-7 years.

There are other meausures that would go into affect right away. One being, they would like to lover the Agency loan limits from $729,750 down to $625k. They would like that to be effective in October.

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