U.S. Government Planning to Lessen Mortgage Liabilities
Fannie Mae and Freddie Mac, as we well know, are the two American financial giants which required massive government aid when the banking crisis hit more than two years ago now. The companies main business is the acquisition of mortgages which are then converted into securities, guaranteed by the company.
The problem now for the government is that their financial aid took the form of obtaining ownership of the two companies. As the economy slowly recovers it is now looking for a way to pass the two giants back into private hand. The situation now means that the government is guaranteeing almost $1500 billion dollars worth of mortgages with taxpayers money, this is more than 85% of the U.S. market.
Sources say that over a ten year period, the government would like to reduce this percentage to less than 50%. At one end of the scale the Republicans would like to eliminate taxpayer support for mortgages altogether but the current Democrat administration is unlikely to support measures as harsh as that.
U.S. House Prices Continue to Fall
The U.S. CoreLogic House Price Index had shown a continuation of the downward trend in house prices. The survey measures month by month changes in property prices and December 2010 showed a 2.31% decrease compared to December 2009. Similarly November 2010 showed a 2.81% against November 2009.
CoreLogic spokesman Mark Fleming said, however, suggested that this was not all bad news and that an oversupply of housing was largely to blame for the price falls rather than anything else. He also said that several factors have combined to make the last couple of years something of a casino session. Incentives such as tax breaks have briefly raised prices and when withdrawn, the prices have seen a proportional fall. The chart above shows CoreLogic’s results and also demonstrates the recent rises and falls of property values.
