Fannie Mae and Freddie Mac have tightened their rules, and with 80% of the residential market backed by them, you’re gonna want to pay attention! After all, they play a BIG role in the overall health of our housing and financial markets. There are efforts to reduce the footprint of backing mortgages in vacation areas, but the problem is that these areas aren’t exclusively for vacationers and second homes. Listen in as Leigh Brown explains why the new rule could damage many areas in the country by negatively impacting permanent workers, workforce housing, and primary owners — and even contribute to a bump in the cost of credit.
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Time Stamped Show Notes:
- Today’s topic is Fannie Mae and Freddie Mac (GSEs) and how they relate to the health of our housing and financial markets.
- Nearly 80% of the residential market is backed by Fannie Mae and Freddie Mac, which were taken under government guidance during the Great Recession.
- The question: Should they become privatized, should the government keep them, or should there be a public-private partnership?
- If you’re a REALTOR®, attend this webinar on January 14th to learn more about the future of Fannie and Freddie.
- What to be aware of when it comes to Fannie Mae and Freddie Mac:
- Even vacation and investor mortgages can be underwritten by Fannie Mae and Freddie Mac.
- There is a proposal for Fannie and Freddie to tighten the rules on condos and buildings on vacation locales, especially ones with short-term rentals.
- In December 2020, Fannie Mae changed its rules to state that it won’t back certain loans in high rent vacation areas and Freddie Mac followed suit.
- There’s an effort to shrink the footprint of backing mortgages in vacation areas, but REALTORS® argue that not only investors invest there.
- There is also workforce housing, permanent workers, and primary owners; in 2020 many people chose to move into their vacation home to work from home.
- If you take away the ability for someone to get backed financing, you’ll have limited credit which means an increased cost of credit.
- This could damage many areas across the country; if you clamp down on second-home areas, you clamp-down on those who work in those areas, too.
- Primary residence owners also sometimes like to rent out their home while they’re on vacation, which they should be able to do with their own property.
- If you’re a REALTOR®, stay posted here and keep in touch with your elected officials; if you're not a REALTOR®, talk to one to stay in the loop.
3 Key Points
1.) The new Fannie and Freddie rules can damage many areas in the country.
2.) If you clamp down on second-home areas, you clamp down on those who work in those areas, too.
3.) A good REALTOR® wants to protect and preserve homeownership and increase opportunities.
Fannie, Freddie Tighten Rules for Condos in Vacation Locales (The Wall Street Journal)
The Future of the GSEs Webinar: Readying Fannie and Freddie for the Next Chapter