Friday, August 12, 2016

Pittsburgh Mortgage Real Estate Finance Agenda




If your Pittsburgh mortgage is through Fannie Mae or Freddie Mac, you will be interested in knowing the latest decisions made by the Obama administration on remaking the mortgage market. The plan to cut back on the government’s role in housing finance included the winding down of these two programs and was officially announced on February 11, 2011.

The plan outlined the administration’s plans to target federal support for borrowers, stop unfair lending and help to get private investors to return to the mortgage market. What does this mean for those who have a Pittsburgh mortgage? The plan would include starting the reform now, but doing it in stages over the next several years. This would include the more dramatic changes being put on hold until 2018. Three possible resolutions are being considered for restructure once Fannie Mae and Freddie Mac are not around.

 A Pittsburgh mortgage, as well as others could be guaranteed by the Federal Housing Administration as well as other programs. The creation of a “backstop mechanism” that would be in place for support in the event of a crisis is one consideration. Another is providing insurance for securities that are mortgage-backed. The Secretary of the Treasury, Tim Geithner, estimates it could take five to seven years to provide a permanent solution and phase out Fannie Mae and Freddie Mac.

In addition, the way people shop for their Pittsburgh mortgage would be another change that the government would focus on starting now to begin the process. Requiring Fannie Mae and Freddie Mac to match the loan guarantees that private banks use is one recommendation of the plan. The current amount that these two entities are allowed to purchase loans for currently is $729,000. The temporary increase, if allowed to expire according to recommendations under the plan would reset the limit to $625,500. Additionally, the plan asks that the down payments required by loans for Freddie and Fannie be increased.

Another part of the plan by the administration is asking for an increase in the federal insurance premiums on mortgages. The raise proposal is for a hike on FHA loans by 0.25%. Freddie Mac and Fannie Mae are enterprises sponsored by the government that are behind the Pittsburgh mortgage for many as well as others across the nation. In 2008, due huge losses on bad loans, they were bailed out by the federal government.

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