US government takes on big role in mortgage market

WASHINGTON (AP) -- Investors reacted positively today to word that the Bush administration seized troubled mortgage giants Fannie Mae and Freddie Mac.

Private analysts caution it may not be enough to stabilize the housing market because of a glut of vacant homes for sale, rising foreclosures, rising unemployment and weak consumer confidence.

Economist Mark Zandi with Moody's Economy.com predicts that 30-year mortgage rates could dip to close to 5.5 percent. They now average 6.35 percent nationwide. Investors are seen more willing to buy the debt issued by Fannie and Freddie -- and at lower rates -- since the federal government is now standing behind that debt.

Officials announced that Fannie Mae and Freddie Mac were being placed in a government conservatorship, a move that could end up costing taxpayers billions of dollars. Treasury Secretary Henry Paulson has refused to estimate how much the takeover of the two companies will cost the government. He insists that taxpayers will get paid back first.

(Copyright 2008 by The Associated Press. All Rights Reserved.)


Join the Conversation!

To comment, the following rules must be followed:

  • No Obscenity, Profanity, Vulgarity, Racism or Violent Descriptions
  • No Negative Community Comparisons
  • No Fighting, Name-calling, or Personal Attacks
  • Multiple Accounts are Not Allowed
  • Stay on Story Topic

Comments may be monitored for inappropriate content, but the station is under no legal obligation to do so.
If you believe a comment violates the above rules, please use the Flagging Tool to alert a Moderator.
Flagging does not guarantee removal.

Multiple violations may result in account suspension.
Decisions to suspend or unsuspend accounts are made by Station Moderators.
Links require admin approval before posting.
Questions may be sent to webmaster@wvlt-tv.com. Please provide detailed information.

powered by Disqus

WVLT VOLUNTEER TV

6450 Papermill Drive Knoxville, TN 37919 Phone - (865) 450-8888; Fax - (865) 450-8869
Gray Television, Inc. - Copyright © 2014 WVLT-TV Inc. - Designed by Gray Digital Media - Powered by Clickability 27993059 - local8now.com/a?a=27993059