Local real estate agents pleased at mortgage giants bailout

By Deb Holland, Journal staff | Tuesday, September 09, 2008

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The bailout of mortgage giants Fannie Mae and Freddie Mac was good news for area lenders and real estate agents.

The regularly scheduled meeting of the Northern Black Hills Association of Realtors at Spearfish Monday took on an upbeat tone on news that the Treasury Department had seized control of the companies, which own or back about half the nation’s mortgage debt.

“I think it will give our clients confidence that the government is standing behind these products. It should ease their concerns and reassure them that now is a good time to invest in real estate,”  association president Cami Dohman said.

This may be the news those leery of the mortgage market were waiting for.

“Some clients who were on the fence about buying might see this as a stabilizing of the market and a good time to move ahead,” Dohman said.

The action should help keep mortgages affordable for consumers, said Tom Lessin, real estate mortgage manager at First National Bank in Rapid City.

“Overall, we may see a little bit of a reprieve,” Lessin said of rates.

He, too, saw the government backing of the companies as a calming effect for investors who see Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.) as viable investments again.

The two government-charted organizations are publicly held stock companies, traded on the New York Stock Exchange.

“Without the bailout or infusion, the investors would pull back out, whereby no one could afford mortgages,” he said.

Consumers need to know that, although the plan may help stabilize the mortgage market, it won’t ease requirements for new mortgages or refinance existing mortgages at lower rates.

“All that subprime stuff is gone. And the no-asset loans are all gone,” Lessin said. “We’re back to the conforming-type loans through FHA, the VA and Rural Development.”

Although a 30-year mortgage hovered around a rate of 6 percent Monday, that rate is dependent on how much of a down payment a buyer has and the person’s credit score.

“If you don’t have a credit score above 720, there will be an adjustment on your rate,” he said. “Lenders are rewarding those with high credit scores.”

Dohman, whose association represents 185 real estate agents in the northern Black Hills, said consumers should be pleased there has been a tightening of controls on home loans.

“Both the consumer and lender will be assured that these people can make their house payments in the future,” she said.

Mortgage loan rates Monday

-- 30-year fixed conventional – 5.875 (rates were 6.25 to 6.5 percent)

-- 15-year fixed – 5.5 (rates were 5.77 percent)