Good Morning,

Fannie and Freddie have been taken over by the Feds.  The good news rates have come down to low 6%.

Mortgage Industry and Economic News:                                                       

U.S. Seizes Control of Mortgage Giants; Washington Post

The federal bailout of Fannie Mae and Freddie Mac involves putting the companies under conservator ship and placing the Federal Housing Finance Agency in charge of their operations and appointment of senior managers. The government has dismissed Fannie Mae and Freddie Mac's CEOs--who will, however, assist in the transition--and will provide capital, if necessary. The plan also calls for a cut in the stake of current shareholders to 20 percent from 100 percent. It additionally will require an increase in mortgage funding by Fannie Mae and Freddie Mac through the end of next year to stabilize the housing market; however, mortgage volume will be reduced 10 percent annually for a decade beginning in 2010 to reduce risks to the overall financial system. The companies--which will no longer be allowed to lobby or engage in other political activities--will be restructured by Congress before 2010.


Fannie, Freddie Deal Helps Some Borrowers, Not All; Associated Press

The government takeover of Fannie Mae and Freddie Mac may help home buyers and certain homeowners interested in refinancing by lowering mortgage rates, and luring more buyers to the housing market in turn could prevent additional declines in residential prices. senior financial analyst Greg McBride believes the 30-year fixed mortgage rate could slip upwards of 0.50 percentage points from its current level of 6.35 percent. Borrowers also would benefit if the government lowers or scraps fees imposed by the companies to safeguard against rising credit risk and mortgage-related losses. However, experts say delinquent borrowers or those whose mortgage balances exceed their home's value will not benefit from the bailout.


Mortgage Bonds May Rally, Rates Fall on Treasury Grab; Bloomberg

Experts believe the Treasury Department's takeover of Fannie Mae and Freddie Mac will bolster mortgage bonds guaranteed by the companies, especially since their debt is backed by the AAA rating of the U.S. government. David Stevens, formerly of Freddie Mac's single-family home division, expects increased confidence among investors to help push down mortgage rates; and he predicts lenders will be flooded with applications for rate negotiations. However, First Principles Capital Management CEO Doug Dachille says there is a possibility that "all that happens is Treasuries sell off and mortgages don't move."