Lead Mortgage Refi

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Most who comment here seem to believe we are still in the early stages of a real estate downturn, with no sign of a bottom yet. If you are right -- and we think you are -- it follows that that the federal government, too, is in the early stages of its response, and will likely broaden its response as the housing market weakens.

That is what appears to be happening in Washington this week, starting with the Federal Reserve’s half-point cut. Now the Bush administration is back-pedaling a bit, indicating it is willing to allow the bigger role for Fannie Mae and Freddie Mac that Democrats have been advocating.

News item from the AP today: ‘Treasury Secretary Henry Paulson ... signaled that the administration would consider allowing the big mortgage companies Fannie Mae and Freddie Mac to temporarily buy, bundle and sell as securities any loans exceeding $417,000, known as ‘jumbo’ loans.’

MORE: ‘The idea, which represents a policy change for the administration, is portrayed as a way to inject liquidity into the stretched mortgage market. Paulson said the change involving jumbo loans could occur only in tandem with tighter oversight of the two government-sponsored mortgage companies.’

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Photo Credit: Reuters