How does Fannie Mae & Freddie Mac affect Charlotte NC real estate?

 

Well, they finally did it. The Bush administration said today that they would instruct the federal government to take control of our ailing guarantors, Fannie Mae and Freddie Mac. As a result of the change, the executive and board of directors have been replaced in hopes for the greatest result of the change and to create a more positive direction as the two companies try to pull themselves out of the slump of recent mortgage losses. According to the government, the actions were being taken because Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that their failure would cause irrevocable damage to our financial markets here at home and globally.  Others believe that the two companies got themselves into this mess and should be allowed to fail, as would any other company which was mismanaged to such an extent.

 

 

 

 

Moving forward, Fannie Mae is now headed up by Herb Allison, a former vice chairman of Merrill Lynch, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac. The liabilities of these companies, now the burden of the taxpayers, could amount to as much as tens of billions of dollars but those making these decisions state that the risk of doing nothing could cost much more.

Here in Charlotte, NC real estate is holding stronger than in many parts of the country but the reality that getting a mortgage today is harder than it was a year ago is one that is known well by all professionals in the business. If Fannie Mae and Freddie Mac were to completely fail, next year could be even worse for Charlotte and means that there’d be a lot of additional homes for sale which just sit due to lack of financing.

To prevent a worst case scenario, Fannie Mae and Freddie Mac were placed into a government conservatorship, administered by the Federal Housing Finance Agency, the new agency created by Congress this summer initially only to regulate Fannie and Freddie. It’s unclear as to when or if the two giants will return to the national stage as their former impendent form or if it’ll be something different but all of us in Charlotte real estate are hoping the government knows what they’re doing, and they do it well.