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Posted: 6:34 PM Sep 8, 2008
Local reaction to massive mortgage bailout
It's the biggest bailout in government history. The U.S. government is taking over mortgage giants Fannie Mae and Freddie Mac. Together, the companies own or guarantee about five trillion dollars in home loans. Reporter: Sarah PlattEmail Address: sarah.platt@wndu.com |
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It's the biggest bailout in government history. The U.S. government is taking over mortgage giants Fannie Mae and Freddie Mac. Together, the companies own or guarantee about five trillion dollars in home loans.
Some experts say the bailout is good news for homebuyers and homeowners hoping to refinance, as the situation may lead to lower interest rates. But others worry the burden of cost will fall on taxpayers.
While it's not a cure all, many say it's a step in the right direction, and no action may have meant an even bigger downturn of the U.S. economy.
The Fannie Mae and Freddie Mac bailout was a topic of discussion at this finance class at the University of Notre Dame. Students tell us they're hoping to learn from the mistakes of the past as they prepare to enter the financial world.
While the bailout may help some, Professor David Hutchison says it won't help homeowners who are already late on their mortgage payments or are facing foreclosure.
“The threat of total financial collapse without action is enormous. Fannie Mae and Freddie Mac are responsible for the credit quality of trillions of dollars in mortgages. There's no financial institution of any size in America that isn't exposed to them in America in the mortgage industry,” says Hutchison.
“We've seen how things have unfolded in the market because of mistakes made or securities that shouldn't have been bought or sold,” says Notre Dame finance student Dave Leach.
Meantime, Newscenter 16 talked with some folks in the real estate and mortgage industry. They say they're hoping the bailout will bring their market more stability and make homes easier to buy and sell.
The cost of Fannie and Freddie’s bailout is around 200 billion dollars. Experts say that could fall on the taxpayers or a change in the insurance fees that are charged on mortgages.
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