That is the headline of the Telegraph.co.uk article that predicts a rally in the world markets as a result of the government bail out of Fannie Mae and Freddie Mac. They are labeling this move as “the most far-reaching rescue package for America’s financial system since Franklin Roosevelt’s New Deal” Yes, the the world is watching!
This bail out basically gives the U.S. Treasury sweeping authority to inject capital into Fannie and Freddie to provide rock solid stability as they see their way through the mounting financial crisis in the mortgage backed securities market. The ceiling on the US national debt has been lifted by $800 billion giving the Treasury almost unlimited resources to prop up these to entities.
The Foreclosure Prevention Act passed earlier this week and expected to be signed by President Bush will guarantee up to $300 billion for new mortgages to help homeowners survive this market with home ownership in tact.
With over 740,000 homes that went into foreclosure in the second quarter of 2008 the country looks to HUD and the FHA as the government steps in to stem the oncoming onslaught of foreclosure that tick away like time bombs. With programs like FHASecure and H.R. 3221 helping to slow the tide of soon to adjust mortages there is still much to be done as this is only the tip of the iceberg.
Stay tuned for more news. President Bush is due to sign the bill tomorrow and then it’s in the lender’s hands to see if they are willing to participate in the principle reduction requirement that is the core of this bill.
