Mortgage Bailout: Will It Work?
Until recently, Fannie and Freddie stuck to their mission - insuring and financing low-down-payment mortgages to low- and middle-income families with good credit and income histories. This was a profitable business. If housing prices stabilize, Fannie and Freddie should become profitable and attractive investments again. The Treasury will be able to sell its common and preferred stock and may recoup most or all the money that it puts in now.
In other words, this particular assessment points to the bailout not costing the average taxpayer quite as much and suggest that it is - at this stage - simply a matter of getting things back to normal. By letting Fannie Mae and Freddie Mac access the money that they need to approve loans for qualified homebuyers, the hope is that lending practices get back to normal.
Obviously the changes aren’t going to happen overnight; still it’s important to consider all of the options.
