The whole banking sector, US Government, the Dow and Nasdaq are seemingly in free fall. Many of you are being driven from your homes in waves of foreclosure, the likes of which have not been seen since the Great Depression. Those of you that still have residences are looking for refinancing home loans to help save your dwindling finances.
Many of you will find that the companies that offer refinancing home loans are not as interested in your financial well being as much as they are interested in profiting from your financial woes. Because of the financial instability of the market, the lenders are in a stronger position to dictate the terms of the refinance loans. If you have bad credit, you are in an even weaker position to deal.
The seemingly final blow is that many of you are about to see an increase in your adjustable rate mortgage. This increase is occurring as the market value of homes has plummeted thus reducing your equity in your home. The reduced value of your home makes refinancing home loans more difficult to come by and also makes selling your home more difficult.
Fortunately, the US Congress has stepped in with a Bill to help those of you in jeopardy of foreclosure from totally defaulting on your mortgage loan. Billions of dollars will be funneled into Fannie Mae and Freddie Mac to help assure private lenders make loans to needed mortgage holders. The private lenders providing refinancing home loans will be insured by Fannie and Freddie against loss in the event a mortgage goes into default.
Fannie Mae and Freddie Mac are government-sponsored enterprises that have been taken over by the US Government and placed into conservatorship by the US Treasury. This unprecedented move was necessary to prevent the total collapse of the mortgage industry as Fannie and Freddie were on the verge of insolvency.
Lenders providing refinancing home loans will now be required to lend to those of you whose home value has dropped significantly. This requirement essentially means that lenders and banks will suffer monetary losses when they lend to you. However, the Bill stipulates that those of you who profit from these new home loans must share your profits with Fannie or Freddie when you sell your property. I’d say that is not a bad deal when you consider the alternative of losing your home.